A CDC lender is a Certified Development Company: a nonprofit that the U.S. Small Business Administration certifies and regulates to make SBA 504 loans. SBA calls CDCs its "community-based nonprofit partners," and they are the only place a 504 loan comes from. Your bank cannot make one on its own, and neither can an online lender.
If you are buying a building, constructing one, or putting in heavy equipment, a CDC is usually the cheapest long-term money an SBA program offers. If you need working capital, it is the wrong door.
How a 504 loan is built
A 504 loan is never the whole loan. It sits inside a three-part package, and the regulations set the minimum size of each part:
| Piece | Who provides it | The rule |
|---|---|---|
| Senior loan | A bank or other "third party lender" | At least as large as the 504 loan, so usually about 50% of the project. It holds the first lien. |
| 504 loan | The CDC, with SBA's guarantee | Typically about 40%, on a second lien behind the bank. |
| Down payment | You | At least 10% of the project cost. |
That is the familiar 50/40/10 split. Two situations raise your share. A business that has operated for two years or less, or a project for a limited or single-purpose building, needs at least 15% down; a project that is both needs 20%. In those cases the bank's loan must also cover at least half the project (13 CFR 120.910 and 120.920).
The bank's loan has its own minimum term: at least 7 years alongside a 10-year 504 loan, and at least 10 years alongside a 20-year one.
What a 504 loan can and cannot pay for
SBA lists the eligible uses as:
- Buying, building or renovating buildings or land
- Machinery and equipment with at least 10 years of useful life left
- Refinancing or consolidating debt that meets SBA's definition of "qualified debt"
It cannot pay for working capital, inventory, or speculation or investment in rental real estate. A firm that just won a contract and needs cash to make payroll before the first invoice clears needs a 7(a) loan, a line of credit or contract financing, not a 504.
How much you can borrow
SBA's own 504 page says "up to $5 million" in its headline and "$5.5 million" lower down. Both are right, and the regulation explains why (13 CFR 120.931):
- $5 million is the cap on the 504 portion per borrower, including affiliates, for most projects.
- $5.5 million per project applies to small manufacturers (NAICS 31 to 33) with all production in the U.S., projects that cut energy use by at least 10%, and certain renewable energy projects.
Since July 4, 2026, the 504 cap also stands apart from 7(a). SBA's rule, announced in news release 26-52, lets a borrower carry up to $5 million in 7(a) loans and up to $5 million in 504 loans, $10 million combined; before, the two shared one $5 million limit. Those caps apply to the CDC's share. Because the bank provides at least as much again, total projects can run well past $10 million.
The 504 portion carries a fixed rate set at an increment above the 10-year Treasury, with 10-, 20- and 25-year terms. SBA puts total fees at about 3% of the debt, and they can be rolled into the loan.
The jobs test, and the rule that changed in October 2025
Every 504 project has to earn its place by creating or keeping jobs, or by meeting a community development or public policy goal. For loans approved on or after October 1, 2025, SBA raised the jobs ratio (90 FR 47117):
- One job created or retained per $95,000 of SBA-guaranteed debt, up from $90,000.
- One job per $150,000 for small manufacturers and energy projects, up from $140,000.
A $1.9 million 504 loan therefore needs to support 20 jobs, or about 13 for a small manufacturer. Retained jobs count, which is how many building purchases qualify.
Why the public policy goals matter for women-, veteran- and minority-owned firms
A project does not have to hit the jobs ratio on its own if it meets one of the goals in 13 CFR 120.862, as long as the CDC's overall portfolio averages one job per $150,000. Three of those public policy goals are expanding small businesses owned and controlled by women, by veterans (the rule says "especially service-disabled veterans"), and minority enterprise development.
That gives a women-owned manufacturer or a service-disabled veteran-owned firm a second route to eligibility when the project is capital-heavy and light on new hires.
The minority enterprise goal now needs a careful question to your CDC. The rule still says to "see § 124.103(b) of this chapter for minority groups who qualify." That section is SBA's 8(a) definition of social disadvantage, and SBA rewrote it effective September 10, 2026: paragraph (b) no longer lists groups and instead requires an individual showing of discrimination and material harm. Our 8(a) guide covers the new test. Ask any CDC how it is applying the minority enterprise goal to new applications before you build your eligibility case on it.
How to find a CDC
SBA publishes a list of CDCs by state on its 504 page. CDCs are regional, and most lend across a state or several. Choosing one comes down to three questions:
- Does it close loans like yours? A CDC that does mostly owner-occupied offices may be slow on a manufacturing plant.
- Which banks does it work with? The CDC needs a senior lender, and a CDC with a strong bank network can bring one to the table.
- How fast does it package and close? Ask for its typical time from application to SBA authorization.
For the first question, volume data helps. Our sister reference site, SBA Loan Index, ranks the 202 Certified Development Companies in SBA's record by 504 lending, using SBA's public FOIA loan data. Our directory of diversity-focused lenders lists banks and CDCs with programs for diverse-owned firms, and our guide to choosing an SBA lender covers the 7(a) side.
The short version
A CDC lender is where SBA 504 loans come from. Bring at least 10% down, plan on a bank holding the first half of the project, use it for buildings and long-lived equipment rather than working capital, and expect to show one job per $95,000 of SBA-backed debt, or a public policy goal, for loans approved since October 2025.
