A [[SBA Loans | Small Business Administration (SBA) 504 loan]] is a long-term loan offered by the U.S. Small Business Administration (SBA) to help small business owners finance the purchase of real estate, equipment, and machinery for their business operations. It provides for long-term, fixed rate financing for up to 20 years with only 10% down payment from the borrower. The SBA 504 loan is typically offered in conjunction with a bank or other lender who provides 50% of the total project costs and the borrower provides 10%. The remaining 40% is funded by a Certified Development Company (CDC), typically a local non-profit corporation, which works with the SBA and lenders to provide economic development within its community. The benefits of an SBA 504 loan include lower down payments. Can only be used for real estate that is at least 50% owner occupied. Is used to reduce the typical down payment requirement There are two loans: The bank is the first position lien holder with 50% A CDC lender is the second position lien holder with 40% The Borrower contributes the remaining 10% as equity [[CDC]]'s (Community Development Corp's) are nonprofits created to support and revitalize communities The interest rate on CDC loans are often favorable to traditional bank financing. CDC loans may have prepayment limitations.