Cdc 504 Loans

CDC/504 Loans

Market Direct Capital connects borrowers with private non-bank SBA teams and Certified Development Companies for CDC/504 projects. The structure pairs a private first mortgage with a CDC second so you can finance owner-occupied real estate or major equipment with long-term, fixed-rate debt and a lower equity requirement.

Where CDC/504 fits

Use CDC/504 when the goal is stable, long-term payments on fixed assets for an operating business.

• Owner-occupied real estate: Purchase, construction, or refinance with eligible improvements.
• Major equipment: Production lines, manufacturing, medical, or similar long-life assets.
• Expansion projects: Buildout, additions, and site improvements that support growth.
• Refinance eligible debt: Improve payment stability where rules allow.

Typical structures

Exact terms depend on project type and guidelines. A common pattern is a senior first from a bank or private lender and a subordinate CDC second funded by an SBA debenture.

• First mortgage: Private or bank senior loan with market terms.
• CDC second: Long-term, fixed-rate second lien sized to eligible costs.
• Equity contribution: Lower down payment than many conventional options.
• Use of proceeds: Land, building, construction, equipment, soft costs, and eligible fees.

Eligibility highlights

• Operating company use: Property primarily used by the business.
• Occupancy standards: Owner-occupied requirements apply for existing buildings and new construction.
• Project viability: Reasonable projections, experience, and repayment ability.
• Collateral: Subject property or equipment secures the financing.

What lenders and CDCs review

Credit teams focus on cash flow coverage, project feasibility, and long-term suitability for the operating business.

• Cash flow & DSCR: Historical performance and forward view post project.
• Management: Experience relevant to the business and the project.
• Project scope: Plans, costs, timeline, and contractor or vendor details.
• Equity & liquidity: Ability to fund the required contribution and reserves.

Process

We coordinate the senior lender and CDC so the package moves efficiently from read-out through closing.

1. Read-out: Goals, eligibility view, and checklist tailored to the project.
2. Packaging: Executive summary, sources and uses, plans or quotes, and financials.
3. Dual track review: Senior lender underwriting alongside CDC submission.
4. Closing: Appraisal, title, legal, and debenture scheduling with clear milestones.

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Related programs

• SBA 7(a) for working capital, acquisitions, and flexible use of proceeds.
• Private real estate loans for bridge or hybrid structures.
• Equipment financing to complement a 504 project.
• MCA to SBA transition to stabilize before pursuing SBA eligibility.