SBA 504 Loan ProgramSBA 504 Loan Program

Maximum 504 debenture

$5,000,000 outstanding per borrower and affiliates; $5,500,000 per project for small manufacturers (NAICS 31-33 with all production in the U.S.) and eligible energy public policy projects

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7(a) loans and the 504 limit

A borrower's outstanding 7(a) balance does not reduce the 504 maximum; a 7(a) loan may be approved first and a 504 loan second (effective July 4, 2026)

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Minimum debenture

$25,000

ecfr.gov

Standard financing structure

Third Party Lender 50% or more, CDC/SBA debenture up to 40%, borrower at least 10%; no more than 50% of eligible project costs from federal sources

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New business or limited/special purpose property

Debenture up to 35% and borrower at least 15%; both conditions together: debenture up to 30% and borrower at least 20%

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Maturities

10, 20 or 25 years; up to 25 years for real estate, at least 10 years for machinery and equipment

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Debenture interest rate

Set by the market for long-term government debt at the debenture sale; the 5-year Treasury is the usual benchmark for 10-year debentures and the 10-year Treasury for 20- and 25-year debentures

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Debenture sales (calendar 2027)

20- and 25-year debentures are sold monthly; 10-year debentures only in designated months

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Job creation or retention

One job per $95,000 guaranteed by SBA; one per $150,000 for small manufacturers and energy public policy projects (loans approved on or after October 1, 2025)

federalregister.gov

CDC portfolio job average

For projects approved under other economic development objectives (13 CFR 120.862), the CDC portfolio must average one job per $150,000 guaranteed; for projects in Alaska, Hawaii, enterprise and empowerment zones, enterprise communities, labor surplus areas and Opportunity Zones it may average up to $150,000 per job

federalregister.gov

SBA upfront guaranty fee (FY 2027)

0.50% of the debenture; waived for manufacturers, listed food supply chain industries and rural-area businesses

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SBA annual service fee (FY 2027)

0.203% of the outstanding balance for loans approved October 1, 2026 to September 30, 2027; waived for manufacturers, listed food supply chain industries and rural-area businesses

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Third Party Lender participation fee

One-time 0.50% of the Third Party Loan when it is senior to SBA

ecfr.gov

CDC fees

Processing fee up to 1.5% of net debenture proceeds; closing fee (up to $10,000 may be financed); servicing fee 0.625% to 2% a year, above 1.5% (rural) or 1% (elsewhere) only with SBA approval

legacy.sba.gov

Other debenture costs

Funding fee 0.25% of net debenture proceeds; underwriter's fee 0.4% (20- and 25-year) or 0.375% (10-year); CDC annual fee to SBA of 0.125% paid from the CDC servicing fee

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Construction contingency

Up to 15% of project construction costs

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Disbursement deadline

48 months from approval unless SBA grants an extension

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Third Party Loan maximum rate

6% over the New York Prime rate, or the state legal maximum if lower

federalregister.gov

ALP Express

ALP CDCs in good standing may approve 504 loans of up to $500,000 under delegated authority; SBA reviews eligibility only

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• The applicant must be an operating business, organized for profit, located in the United States, and small under either its industry size standard or the alternative size standard (tangible net worth of no more than $20 million and average net income after federal taxes of no more than $6.5 million for the two prior fiscal years).legacy.sba.gov
• 100% of direct and indirect owners and SBA-required guarantors must be U.S. citizens or U.S. nationals whose principal residence is in the United States, its territories or possessions; lawful permanent residents may not own any share (effective March 1, 2026). Entity owners must be organized in the United States.legacy.sba.gov
• The project must create or retain one job per $95,000 guaranteed by SBA ($150,000 for small manufacturers and energy public policy projects), or meet a community development or public policy goal in 13 CFR 120.862 while the CDC's portfolio meets its job average. Otherwise the debenture must be reduced.legacy.sba.gov
• Community development and public policy goals include improving or stabilizing the local economy, assisting manufacturers, rural development, expanding exports, business district revitalization, increasing productivity and competitiveness, meeting health, safety and environmental requirements, reducing energy use by at least 10%, sustainable design, and renewable energy.ecfr.gov
• Eligible uses are the purchase, construction or renovation of buildings or land, long-term machinery and equipment with a remaining useful life of at least 10 years, and debt consolidation or refinancing that meets 13 CFR 120.882(e) or (g). Working capital, inventory, speculation and investment in rental real estate are not eligible.sba.gov
• For an existing building the borrower must occupy at least 51% of the rentable property; for new construction at least 60% immediately, with up to 20% leased long term and the rest occupied within 10 years.ecfr.gov
• Change-of-ownership projects may finance only eligible long-term fixed assets, must show jobs created or retained, must leave the buyer with 100% of the business, and the seller may not stay on as an officer, director, owner or key employee.legacy.sba.gov
• Projects that relocate a business out of a community with a net loss of one-third of its jobs or a substantial increase in unemployment, and projects in foreign countries, are ineligible.legacy.sba.gov
• Credit must not be available elsewhere on reasonable terms, including from the Third Party Lender or the liquidity of owners of 20% or more.legacy.sba.gov

• Only Certified Development Companies make 504 loans. A CDC must be a nonprofit corporation in good standing with at least nine voting directors, full-time professional management and staff, and a minimum level of lending activity.sba.gov
• The Third Party Lender must be committed at application through a letter of intent, term sheet or commitment letter, and the application must state why it will not finance the entire project.legacy.sba.gov
• Third Party Loans must total at least the 504 loan amount, and at least 50% of project cost when the borrower has operated two years or less or the project is a limited or single purpose asset.ecfr.gov
• For projects with total costs of $5,000,000 or more, the Third Party Lender's credit memorandum or underwriting analysis must reach SBA, either inside the CDC credit memorandum or sent directly by the Third Party Lender.legacy.sba.gov
• The Third Party Loan must run at least 7 years with a 10-year debenture and at least 10 years with a 20- or 25-year debenture, and must not contain cross-default, deem-at-risk or demand provisions unless the loan is in default.legacy.sba.gov
• The Third Party Lender must give the CDC and SBA written notice of default within 30 days and at least 60 days before foreclosure, may not make future advances after project completion except to protect collateral, and is subordinate to the CDC/SBA lien for prepayment penalties, late fees and default interest.ecfr.gov
• The only intercreditor agreement allowed between the CDC and the Third Party Lender without SBA's written consent is SBA Form 2287, Third Party Lender Agreement.legacy.sba.gov
• The Third Party Lender participation fee must be withheld from the CDC processing fee.legacy.sba.gov
• An interim lender must be an experienced, independent source; the borrower and its Associates may not provide interim financing, and a CDC may provide it only for another CDC's project.legacy.sba.gov
• CDCs process 504 loans as non-delegated, Abridged Submission Method, ALP, ALP Express (up to $500,000) or PCLP. PCLP CDCs may not use delegated authority to refinance same institution debt.legacy.sba.gov
• CDCs must disclose 100% of the applicant's direct and indirect ownership in the SBA loan system.legacy.sba.gov
• CDCs must enter the date of birth of every owner they enter in E-Tran.legacy.sba.gov
• CDCs may rely on an annual certification from a federally regulated Third Party Lender for OFAC screening of 504 applicants; otherwise the CDC must check the OFAC lists itself.legacy.sba.gov

• Cash flow of the business is the primary source of repayment. Historical debt service coverage (EBITDA over post-transaction debt service, using the last fiscal year or the average of the last two) must be at least 1.15:1; if it is not, the CDC must analyze at least two years of projections.legacy.sba.gov
• Borrower contribution is at least 10% of project cost, 15% for a new business or a limited or special purpose property, and 20% for both. A borrowed contribution must be subordinate to the Third Party Loan and the 504 loan.ecfr.gov
• Each individual who owns 20% or more directly or indirectly must give an unlimited full guaranty; if no one owns 20%, at least one owner must guarantee. When a trust must guarantee, the trustor must also personally guarantee.legacy.sba.gov
• SBA usually takes a second lien on the project property behind the Third Party Lender's first lien. If the loan is not fully secured by business assets, available personal assets must be pledged to support the guaranty.legacy.sba.gov
• A real estate appraisal is required when the project property is estimated at over $500,000 (state-certified appraiser over $1,000,000), dated within 12 months of application and naming SBA as client or intended user. If the appraisal comes in under 90% of the estimate, the debenture must be reduced or the gap covered by more collateral or equity.legacy.sba.gov
• The CDC credit memorandum must cover financial statements, a pro forma balance sheet, repayment ability, global cash flow, ratio analysis, management experience, collateral, life insurance, personal credit reports on guarantors (within 90 days), tax status, and any prior loss to the government.legacy.sba.gov
• Applicants with a prior loss to the government or delinquent federal debt are ineligible; since June 1, 2026 SBA may waive the prior loss rule case by case for owners who held less than 20%, did not guarantee the defaulted SBA loan and had no control.legacy.sba.gov

• SBA Form 1244SBA 504 Borrower Information Form, completed by the applicant and the CDCOpen
• SBA Form 413Personal financial statement for owners of 20% or more and guarantors, dated within 90 daysOpen
• IRS Form 4506-CAuthorization to obtain IRS tax transcripts (Form 8821 is the alternative)Open
• SBA Form 159Fee disclosure when an agent is paid in connection with the applicationOpen
• SBA Form 2481Historic property borrower certification, when applicableOpen
• SBA Form 148Unconditional guarantee from owners of 20% or moreOpen
• SBA Form 2287Third Party Lender Agreement between the CDC and the Third Party Lender, required at closingOpen
• SBA Form 2288Interim Lender Certification, signed no more than 60 days before debenture fundingOpen
• SBA Form 1506Servicing Agent Agreement among the borrower, CDC and Central Servicing AgentOpen

• SOPSOP 50 10 8.1, Lender and Development Company Loan Programs, with Technical Policy UpdatesVersion 8.1Effective Oct 1, 2026legacy.sba.gov
• Rule13 CFR Part 120, Subpart H: Development Company Loan Program (504)ecfr.gov
• Policy noticeDevelopment Company Loan Program: Job Creation and Retention Requirements (90 FR 47117)Effective Oct 1, 2025federalregister.gov
• Information noticeInformation Notice 5000-881796: FY 2027 504 Program FeesEffective Oct 1, 2026legacy.sba.gov
• Policy noticePolicy Notice 5000-879058: Coordination of 7(a) and 504 for Maximum Loan LimitsEffective Jul 4, 2026legacy.sba.gov
• Procedural noticeProcedural Notice 5000-876626: Revised Applicant Ownership, Citizenship, and Residency RequirementsEffective Mar 1, 2026legacy.sba.gov
• SOPSOP 50 55, 504 Loan Servicing and LiquidationEffective Oct 1, 2013legacy.sba.gov
• Program pageSBA 504 loans program pagesba.gov

• Oct 1, 2026Information notice

  SBA Form 1506 Servicing Agent Agreement updated (Information Notice 5000-881291)

  SBA revised SBA Form 1506 to conform with Executive Order 14247. The Third Party Lender fee must now be withheld from the CDC processing fee, and borrower payments to the Central Servicing Agent must be by ACH debit or wire only; checks are not accepted. CDCs had a 30-day grace period to use the new form.

  What to do: Use the revised SBA Form 1506 for closings after the grace period, withhold the Third Party Lender participation fee from the CDC processing fee, and set up ACH for each borrower.

  Effective Oct 1, 2026Read the source
• Sep 25, 2026Information notice

  SOP 50 10 8.1 with Technical Policy Updates (Information Notice 5000-882227)

  Replaces the SOP 50 10 8.1 text published in August before it took effect. For 504 loans it lets the Third Party Lender send its underwriting analysis directly to SBA's Sacramento Loan Processing Center, removes the bar on a Third Party Loan amortizing over a longer period than the debenture, and expands the 327 procedure when a non-environmental indemnification provision appears in the title records. It also requires that when trusts together own 20% or more of the applicant, each trust gives an unlimited full guaranty and the trustor also guarantees personally.

  What to do: Use the September 25, 2026 SOP text, not the August version. Decide with each Third Party Lender whether its underwriting analysis goes into the CDC credit memorandum or straight to SBA, and review title records early for indemnification provisions that need a waiver or a 327 request.

  Effective Oct 1, 2026Read the source
• Sep 9, 2026Information notice

  504 debenture funding schedule for calendar year 2027 (Information Notice 5000-881289)

  SBA published the 2027 cut-off, pricing and funding dates for 504 debentures. 20- and 25-year debentures are offered every month; 10-year debentures only in the months marked on the schedule. The Central Servicing Agent cut-off stays about 14 days before pricing.

  What to do: Plan closings against the 2027 CSA cut-off dates, and steer 10-year (equipment) debentures to the months that offer them.

  Effective Jan 1, 2027Read the source
• Sep 3, 2026Information notice

  FY 2027 504 fees (Information Notice 5000-881796)

  For 504 loans approved October 1, 2026 through September 30, 2027, the upfront guaranty fee is 0.50% and the annual service fee is 0.203% of the outstanding balance (down from 0.209% in FY 2026). Both fees are waived for loans to manufacturers (NAICS 31-33), to listed food supply chain NAICS codes, and to businesses located in a rural area, including debt refinance loans with or without expansion. In FY 2026 the waiver covered manufacturers only.

  What to do: Price FY 2027 approvals at 0.50% upfront and 0.203% annual, and check every application against the manufacturer, food supply chain and rural waivers before quoting fees.

  Effective Oct 1, 2026Read the source
• Aug 14, 2026Information notice

  SOP 50 10 8.1 issued (Information Notice 5000-880695)

  SOP 50 10 8.1 applies to 504 applications issued an SBA loan number on or after October 1, 2026; applications submitted through September 30, 2026 stay under SOP 50 10 8. It folds in the policy and procedural notices issued since SOP 50 10 8, including Policy Notices 5000-876441, 5000-879058 and 5000-879464 and Procedural Notices 5000-872764 and 5000-876626. Until SBA updates its application forms, lenders must collect every certification required by both the current forms and the new SOP and keep them in the loan file.

  What to do: Switch 504 processing to SOP 50 10 8.1 for applications submitted on or after October 1, 2026, and keep the extra certifications the new SOP requires in each loan file until revised forms are released.

  Effective Oct 1, 2026Read the source
• May 28, 2026Policy notice

  Prior loss rule waiver for non-controlling owners (Policy Notice 5000-879464)

  SBA may waive, case by case, the rule that bars an applicant whose owner was tied to a business that caused a loss on a 7(a) or 504 loan, if that owner held less than 20%, did not guarantee or co-borrow on the defaulted loan, and had no control. The waiver does not cover non-SBA federal losses, PPP or COVID EIDL losses, or delinquent federal debt.

  What to do: When CAIVRS or the application shows a prior SBA loss tied to a small non-controlling owner, document the owner's stake, guaranty status and lack of control and request the waiver at application.

  Effective Jun 1, 2026Read the source
• May 18, 2026Policy notice

  7(a) and 504 maximum loan limits coordinated (Policy Notice 5000-879058)

  A borrower's outstanding 7(a) balance no longer reduces the 504 maximum. The $5,000,000 504 limit counts only 504 loans of the borrower and affiliates, so a 7(a) loan for working capital and a 504 loan for the facility can be made in sequence. A 504 project may also include several eligible assets financed at the same time with separate 504 loans, within debenture limits.

  What to do: Recalculate 504 capacity for borrowers with existing 7(a) loans, counting only 504 debentures against the $5,000,000 limit.

  Effective Jul 4, 2026Read the source
• Mar 18, 2026Procedural notice

  Owner date of birth requirement extended (Procedural Notice 5000-877472)

  Extends Procedural Notice 5000-866498 (effective March 27, 2025): CDCs must enter the date of birth of every owner they enter into the SBA loan system until the application process is updated.

  What to do: Collect a date of birth for every owner at intake and enter it with the ownership data.

  Effective Mar 18, 2026Read the source

504 loans are made only by Certified Development Companies, nonprofit corporations certified and regulated by SBA. An organization becomes a CDC by applying to SBA on SBA Form 1246 and meeting the certification and operating requirements in 13 CFR 120.810 to 120.830. CDCs can then seek delegated authority as ALP or PCLP CDCs. Banks and other lenders take part as Third Party Lenders by partnering with a CDC on a project: they provide the senior loan (and often the interim loan), issue a commitment letter for the application, and sign SBA Form 2287 with the CDC at closing. Borrowers apply through a CDC that serves their area.

• List of Certified Development Companies
• SBA 504 loans program page
• SBA lender resources (CDC/504)
• Find a local SBA district office
• Application for Certification as a CDC (SBA Form 1246)