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25-Year Debentures Now Available with SBA 504

In addition to the 10-year and 20-year maturities available with 504 loans, SBA is now offering a 25-year option. The goal of this extended maturity is to decrease the monthly payments for those small businesses looking to better manage their operating capital.

25 Year
Effective Interest Rate


20 Year
Effective Interest Rate


10 Year
Effective Interest Rate


Keep Your Current Bank

The 504 Loan Program requires a partnership between TxCDC and a lending institution, so there’s no need to give up that lending relationship you’ve grown comfortable with.
Low, Fixed Interest Rates

With the 504, borrowers take advantage of a low interest rate, which is fixed for either 10, 20 or 25 years.

No Future Balloon Payments

With the 504, borrowers do not have to concern themselves with saving the large amount of cash necessary for a balloon payment. This eliminates the need for refinancing, additional appraisals and deterioration in property values.

Predictable Monthly Payments

Borrowers lock in a low fixed interest rate, which gives them predictable payments and allows them to easily forecast for future years.  So there’s no inflationary pressures and interest rate increases to worry about.

Includes Soft Costs

The 504 finances total project costs, including not just the costs for land, existing building, hard construction and equipment, but also soft costs like furniture, fixtures, closing costs and professional fees.

10% Down Payment

In most cases, borrowers can finance up to 90%, which preserves working capital for day-to-day business expenses.

SBA Split: 50/40/10


Local Bank

A bank provides a first mortgage of 50% of the total project cost. (First Lien Position)



TxCDC provides an SBA 504 loan (as second mortgage) for up to 40% of the total project cost. (Second Lien Position)


Borrower Equity

The borrower provides a down payment of typically just 10% of the total project cost. (15% for start-ups or special purpose building)

TxCDC Process Guide Image

So where do you begin?

Step 1 - CALL TxCDC

We will evaluate the eligibility of the project. If qualified, we will work with you and your bank to identify the best option.

Step 2 - submit the application

Your bank will issue a commitment letter and we will complete the underwriting and prepare the SBA 504 application. Once you sign application documents, we will submit the package to the SBA for approval. 

Step 3 - Approval & Closing

When the SBA issues authorization for the 504 load, your bank will then close on the full amount of financing. 

Step 4 - Borrower proceeds

You can now begin construction or move into an existing facility. Your bank will draw funds and fully fund the interim loan. After completion, you can occupy the property. 

Step 5 - bank & txcdc completion

We will need to certify the project is complete and funding has occurred. TxCDC along with an SBA closing attorney will prepare all closing documents and schedule SBA closing.

Step 6 - Final Funding

SBA proceeds will pay down the 504 portion of the bank debt and you will begin to make monthly loan payments to the SBA as well as the 1st lien note payments to your bank.

504 vs. Conventional

Why rent when you can OWN?  The SBA 504 loan program offers fixed asset financing for small businesses at competitive rates and long terms.  Even new businesses can buy commercial real estate and equipment, investing in their own company instead of renting and adding to the profits of another business.  The low down payment requirement and longer loan terms result in low monthly payments.  In many cases, borrowers find that their payments are lower than what they would pay in rent.  The low monthly payments can help borrowers qualify for more financing as well.

504 Loan

SBA 504 loans offer up to 90% financing for construction projects, purchasing real estate with existing buildings, machinery, equipment, furniture, fixtures and more.  Retaining working capital helps businesses grow and be prepared for unforeseen expenses and inflation.

With the SBA 504 program, terms can go up to 25 years and the interest rate is fixed for the life of the loan.  These provide the borrower with years of fixed low monthly payments without tying up working capital.

Lower payments means better cash flow which can help borrowers pay down the bank loan at a higher interest rate faster.

Financing through the SBA 504 program can even be less expensive than other SBA loan programs like 7(a) loans.

Conventional Loan

Conventional loans typically cover no more than 75% to 80% of project costs which requires higher down payments from the borrower.  This reduces the amount of working capital borrowers have right from the start.

Conventional loan terms are typically between 5 and 7 years and almost always include a final balloon payment at maturity.  They usually have a rate “floor” as well, not going below a specific rate, regardless of how low rates in general go. Once the short loan term matures, the borrower is subject to rate increases, additional underwriting and possibly tightened credit criteria.  If interest rates rise, this is a less favorable option for borrowers.  As such, the borrower is at the mercy of the unpredictable rate environment.

Since 1981, Texas Certified Development Company has been an advocate for small businesses and business owners, helping them grow their business through the SBA 504 loan program. As the oldest Certified Development Company (CDC) in Texas and the third largest independent CDC in the nation, TXCDC has a proven success record in helping businesses grow. With Texas CDC by their side, business owners don’t have to navigate the SBA loan process alone.

The SBA 504 program includes financing for start-up or new businesses, construction projects, machinery, equipment, fixtures, furniture, and professional fees. In many cases, borrowers unable to obtain conventional financing can qualify for an SBA 504 loan. Lenders end up with better collateral coverage (loan-to-value ratios) than with conventional lending, making the SBA 504 program attractive to lenders.

EXAMPLE: Borrower Purchasing $1.2M Land with Existing Building

 Down Payment As low as 10% ($120k) Minimum 20%, up to 25% ($240k to $300k)
 Interest Rate Fixed for the life of the loan Subject to multiple rate increases
 Loan Term Up to 25 years Typically 5 years with Balloon

Clients Testimonials

  • The SBA 504 loan covers Pla-Mor’s construction, equipment and attractions. The 47,000-square-foot building, which is slated to open in spring 2018, will include 24 lanes of bowling, a state-of-the-art arcade, a two-level laser tag area, four climbing walls, a ropes course with a 70-foot zip line, virtual golf and soccer, and fine dining. When open, the facility will provide jobs for 85 area residents, bringing the company’s total payroll to more than 120 employees.

  • Dr. Luis Benavides had a dream – to join with six family practice physicians and create a healthcare facility to serve the Laredo community. Working with Texas Certified Development Company (TxCDC) consultant Armando Ruiz, Dr. Benavides and his partners secured a Small Business Administration 504 loan and made their dream — Laredo Premier Healthcare – a reality. The medical facility served its first patients in October 2016.

    Dr. Luis Benavides
    The Doctors Will See You Now