SBA loan programs
SBA 504 loan: the three-part split and every fee on the CDC loan
A 504 loan finances a building or long-lived equipment in three parts: a bank loan, a loan from a certified development company (CDC, a nonprofit lender approved by SBA) called the debenture, and your own cash. Type the project cost to see each part, the fees and the payments.
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SBA 504 loan: the three parts and their fees
Example, not your result yet· change a figure to see yours
Monthly payments, first 10 years (bank + CDC)
$14,006
| Your cash (10%) | $150,000 |
| Bank loan (50%), 10 years | $750,000 · $9,299/mo |
| CDC loan, 25 years, fees included | $619,000 · $4,707/mo |
| From year 11, CDC loan only | $4,707/mo |
| Fees added to the CDC loan | $19,000 |
| Yearly fees on the CDC loan balance | 0.828% |
CDC: certified development company, a nonprofit lender approved by SBA; its share is a debenture, a loan backed by SBA. Fees added to it: SBA 0.50%, funding 0.25%, CDC processing up to 1.5%, $2,500 closing, and the underwriters’ fee with the rounding up to a round thousand. Yearly: SBA 0.203% and CDC servicing at least 0.625%. The central servicing agent's fee is not included.
An SBA 504 loan pays for owner-occupied real estate and heavy equipment through three lenders at once. A bank or other private lender funds about 50% of the project with a first mortgage; a certified development company (CDC) funds up to 40% with a debenture guaranteed by SBA and sold to investors; and the business puts in 10%, or 15% for a business under two years old or a special-purpose building, and 20% when both apply. The debenture runs 10, 20, 25 years at a fixed rate set when it is sold. Its fees are financed in it: under FY 2027, SBA charges 0.50% up front and 0.203% a year, the CDC up to 1.5% for processing and at least 0.625% a year for servicing, plus funding, underwriting and closing costs. In FY 2026, 6,075 504 loans were approved for $7.1 billion, with a median debenture of $743,000.
Fee notices read and loan file counted by Radif Partners · Editorial policy · Method and sources
The fees, on a $2,000,000 building
The net debenture is 40% of the project, $800,000 here. The fees below are added to it, and the total is rounded up to the next thousand, which gives a gross debenture of $824,000: $24,000 of fees financed over the life of the loan, the sum of the amounts below.
| Fee | FY 2027 rule | On this project |
|---|---|---|
| SBA upfront guaranty fee | 0.50% of the net debenture | $4,000 |
| Funding fee | 0.25% of the net debenture | $2,000 |
| CDC processing fee | up to 1.5% | $12,000 |
| Closing costs | up to $10,000 financed | $2,500 |
| Underwriters’ fee, and rounding up to the thousand | 0.40% (20 and 25 years), 0.375% (10 years) of the gross debenture | $3,500 |
| SBA annual fee | 0.203% a year (0.204% for refinancing without expansion) | in each payment |
| CDC servicing fee | at least 0.625% a year | in each payment |
The SBA upfront fee and the annual fee are waived under FY 2027 for manufacturers (NAICS 31-33), the listed food supply chain codes and businesses located in a rural area, with no ceiling on the amount, unlike the 7(a) relief. The yearly fees, 0.828% here, are charged on the outstanding balance and paid with each installment, so they act like a higher rate.
How big 504 loans are
The 504 is a large-ticket program: the median debenture in FY 2026 was $743,000, against $220,000 for a 7(a) loan, and 94.0% of debentures ran 25 years. The maximum debenture is $5,000,000, or $5,500,000 for manufacturers and certain energy projects; the bank’s first mortgage has no SBA ceiling. The state pages show where 504 lending is concentrated.
504 or 7(a) for a building?
The 504 asks for less cash up front than most bank loans and fixes the rate on its share for up to 25 years. A 7(a) real estate loan can be used when the project also needs working capital, closes with one lender and usually carries a variable rate. On a building alone, compare the blended rate of the two 504 parts, fees included, with the 7(a) quote and its guaranty fee. Ask the CDC for the debenture’s prepayment terms before signing, since a fixed-rate debenture is not repaid early for free.