The 504 Loan Program

EDC Loan Corporation (EDCL) is a non-profit corporation that specializes in the origination and underwriting of 504 loans in partnership with third party lenders (commercial banks, credit unions, non-bank lenders and other private lenders). The 504 Loan Program is an Economic Development tool that is 100% guaranteed by the U.S. Small Business Administration (SBA). The 504 Loan is arranged by the EDC Loan Corporation (EDCL), an SBA approved Certified Development Company.

The 504 Loan can be used for:

• Acquisition of land and buildings
• New construction or renovations
• Machinery and equipment

The 504 is not for marginal or unprofitable businesses; working capital, inventory or accounts receivable financings, or non-owner occupied commercial real estate.

The typical loan structure consists of:

1.   Third party lender lending 50% of the total project cost at a market interest rate for a term of a least 10 years. The lender receives a first lien on all project assets.

1.   EDCL provided a SBA 504 loan for up to 40% of the total project costs. The 504 loan interest rate is fixed for 20 years for real estate projects and 10 years if the project is only for long term machinery and/or equipment, EDCL receives a second lien on all project assets.

1.   The borrower provides 10% of the total project costs as equity injection. The equity injection can increase to 15% for new businesses (in operation less than two years) or if the real estate is considered “special purpose.” If both a new business and “special purpose” real estate the required injection is 20%.

More about the SBA 504 Loan Program

Additional Financing Resources

• EDC Revolving Loan Program
• River Market Loan Fund
• Neighborhood Commercial Revolving Loan Fund
• Brownfields Cleanup Revolving Loan Fund
• Bond Programs