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Newark Low Interest Fixed Rate Financing

The U.S. Small Business Administration’s 504 Loan Program, also known as the Certified Development Company Program, provides affordable long-term, fixed-rate financing to help healthy, expanding small businesses grow. The loans are for acquiring long-term fixed assets, such as land, buildings, machinery and equipment, or for building, modernizing, renovating or restoring facilities.

Generally, Certified Development Companies (CDCs), are nonprofit corporations set up to contribute economic development in their local communities. CDCs work with the SBA and private sector lenders in a public-private partnership to provide financing to small businesses.

Typically, a 504 project includes –

a third party loan secured with a senior lien on the financed asset from a private-sector lender covering 50 percent of the project cost;
a 504 loan secured with a junior lien made by a CDC (funded by a 100 percent SBA guaranteed debenture) covering 40 percent of the project cost; and
a contribution of at least 10 percent equity from the borrower.
The SBA-guaranteed debentures are pooled monthly and sold to private investors.

Maximum Debenture

The maximum SBA debenture is: $1.5 million for regular 504 loans meeting the job creation criteria or a community development goal; $2.0 million for loans meeting certain public policy goals; $4.0 for manufacturing loans.

Generally, a business must create or retain one job for every $50,000 provided by SBA, except for manufacturing loans, which must create or retain one job for every $100,000 provided by SBA.

Use of Proceeds

Proceeds from 504 loans must be used for fixed asset projects such as: purchasing land and improvements, including existing buildings, grading, street improve improvements, utilities, parking lots and landscaping;

construction of new facilities, or modernizing, renovating or converting existing facilities; or purchasing long-term machinery and equipment.
The 504 Program cannot be used for working capital or inventory, consolidating or repaying debt, or refinancing.

Eligible Businesses

To be eligible, the business, with its affiliates, must be operated for profit and fall within the size standards set by the SBA. Under the 504 Program, the business qualifies as small if it does not have a tangible net worth in excess of $8.5 million and does not have an average net income in excess of $3.0 million after taxes for the preceding two years. Loans cannot be made to nonprofit organizations, investment companies, or businesses engaged in speculation or investment in rental real estate.

Terms, Interest Rates and Fees

Interest rates on 504 loans are fixed at the time of the debenture sale. The interest rates approximate the current market rate for five-year and ten-year U.S. Treasury issues, plus a small increment. Maturities of 10 and 20 years are available. Under the Recovery Act, SBA has temporarily eliminated fees for borrowers and third party lenders.


Generally, the project assets being financed are used as collateral. Personal guaranties of the principal owners are also required.

Why a 504 Loan?

Growing businesses are often unable to qualify for traditional financing because of the difficulty of coming up with down payment of 30 percent or more. When a conventional loan is not possible, a 504 loan may be the answer. The SBA 504 loan program gives small business owners the following advantages: generally a lower down payment; below-market, fixed rate financing, which avoids the uncertainties or future market fluctuations; and a longer repayment term that brings debt service in line with the cash flow generated by the asset.

For additional information, contact:

New Jersey Business Finance Corp.

2050 Center Avenue, Suite 375
Fort Lee, NJ 07024

Ira Lutsky, President

Across Nations Pioneers, Inc.

15 Engle Street, Suite 107

Englewood, NJ 07631


Hyun Kim
Phone: 201-541-4101

Trenton Business Assistance Corporation

3111 Quakerbridge Rd., 2nd Floor
Mercerville, NJ 08619


William Pazmino, Executive Director