Loan Types

Advantage CDC is a direct lender for the SBA 504 loan program. However, we offer placement services for SBA 7(a) Loans, Community Advantage Loans, and Conventional Loans in an effort to help small businesses succeed.

504 Loan Program

Program offers up to 90% financing for Purchase OR Refinance of:

  • Existing land & building – borrower must occupy at least 51%

  • Land and construction of building – borrower must occupy at least 60%

  • Construction of building on Ground Lease

  • New or used equipment with remaining 10-year life expectancy

Loan Structure

Applicant/Borrower contributes 10% of total project cost in the form of cash / equity / subordinated financing

  • Lender (Bank or other approved lending institution) provides part of the financing and secures loan in first position against project property. Lender portion typically equals 50% of the total project cost.

  • CDC/SBA provides remaining, typically 40% of the total project cost and secures loan in second position against project property


Typical Structure for a $2MM Total Project Cost




Lien Position













Total Financing: $1,800,000 or 90%

504 vs. 7(a) vs. Conventional

SBA 504 Loan

SBA 7(a) Loan


Down Payment

Usually 10%

Usually 10-30%

25% or more for Real Estate

Interest Rate

Fixed for 25, 20 or 10 years (See current rate on Home Page)

Typically variable rate ranges from Prime Rate + 1% to 2.75%

Typically 25-year amortizing, fixed for 5-years

Length of Term

  • 25, 20 or 10 years for real estate
  • 10 years for equipment
  • 10 years for leasehold improvements
  • Determine by industry type
  • Annual sales restrictions
  • Number of employee restrictions

Determined by the lender

Loan Size

$125,000 to $5.5 million SBA portion only – total project cost could be $25 million or more

Up to $5 million

Determined by lender


  • Generally, only project assets being financed
  • Personal guarantees of 20% or more owners
  • Business guarantee
  • Subject assets acquired by loan proceeds
  • Pledge of personal residence unless bank can justify why unnecessary
  • Personal guarantees of 20% or more owners
  • Business guarantee
  • Generally, project assets being financed
  • Personal guarantees of 20% or more owners
  • Business guarantee

Best Use

Owner-occupied (at least 51%) real estate. Finance of Equipment with remaining life expectancy of 10 years or more

  • Short-term and long-term working capital
  • Purchase an existing business
  • Refinance non-real estate related existing business debt
  • Purchase FF&E

Real Estate


  • 10% down payment!
  • Lowest rates of any government guaranteed business loan
  • Stretch debt over a long term to free up cash and working capital in the business
  • Long-term debt improves balance sheet ratios/credit picture to facilitate credit lines and other short-term loan if needed
  • Diversify your business investment – real estate provides stability during economic instability
  • Fees and closing costs are usually financed in the package
  • Short-term working capital
  • Popular product with banks

Higher fees and rates may incent banks to lend


Limitations on use: owner-occupied real estate, equipment and leasehold improvements

  • Higher rates than 504 loan program
  • Unpredictable future payments due to variable rates with typically no ceiling
  • More expensive debt can impede the business in the loan-term
  • Much higher down payment reduces business liquidity
  • Balloon payments can cause instability

Extra Tip

Ask the bank about the 504 Loan from Advantage CDC – otherwise they may not tell you about it!

Rates are already rising from recent historical low levels

Do thorough price and options comparisons – just because you qualify doesn’t mean you got the best available loan product