The U.S. Small Business Administration's SBA 504 Loan or Certified Development Company program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates.
Certified Development Companies[3] are established under the SBA 504 program as non-profit corporations set up to support economic growth in their local areas.
[needs update] In order to qualify for the program, the borrower must meet the SBA's definition of small business and must plan to use over half (51%) of the property for its own operations within one year of ownership; if the building is to be newly constructed the borrower must use 60% at once and plan to occupy 80%.
The borrower may form a real-estate holding company that lease 100% to the operating business, which then subleases surplus space (up to 49%).
[6] As of 2009[update], the 504 Loan does not contain any restrictions or ceilings; however, there are three criteria for eligibility:[7] There are three partners in an SBA 504 loan—the borrower, a bank or other regulated lender, and a CDC.