SBA 504 Loan Program

About SBA 504

Named Kentucky’s Top 504 Loan Producer in 2017 and 2018.

Congress established the Small Business Administration (SBA) 504 loan program in order to promote the growth of small and medium sized businesses by expanding their access to favorable long-term fixed asset financing. Borrowers and lenders can access 504 financing through a “Certified Development Company” (CDC) that is certified and regulated by the Small Business Administration to make 504 loans.

Community Ventures (CV), an SBA Certified Development Company, serves the entire state of Kentucky. CV has been providing 504 loans to borrowers since 2000.

How It Works.

The SBA 504 program provides a maximum of 40% permanent financing of eligible project costs and takes a second lien on the collateral. A bank, selected by the applicant, finances 50% of the project and takes a first lien on the collateral. The applicant, in most cases, provides the remaining 10%. Typically, the bank lender will provide 90% of the project costs until project debenture funding at which time the proceeds are applied to the interim loan reducing the lender’s loan to 50% of the project.

Startup Businesses.

If the small business has been in operation for 2 years or less, the applicant must provide an additional 5% of eligible project costs, thereby reducing the SBA 504 loan participation to 35%.

Single Purpose Building.

If the project involves a limited or single-purpose building, the small business must provide an additional 5% of eligible project costs, thereby reducing the SBA loan participation to 35% (or 30% if the business is also a start-up). Examples of single-purpose buildings include hotels, gas stations, car washes, bowling alleys, etc.


25 year, fixed-rate financing; Low fixed interest rate; 10% down payment typically (except single purpose and start-ups); Conserve working capital for business growth; Soft costs can be included in project financing; Most small businesses are eligible.



For-profit business located in the United States. Tangible net worth not in excess of $15 million and average net income after federal income taxes for the preceding two completed fiscal years of $5 million or less.



Purchase of land (plus improvements); construction of new building(s); purchase of an existing building plus necessary renovations; acquire and install machinery/equipment with a useful life of 10 years; furniture and fixtures if essential to and a minor part of the project; and professional fees (title insurance and searches, surveys, environmental reports, appraisals, attorney fees, architect/engineering fees, interim interest and loan fees; etc.).

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