The Small Business Administration (SBA) 504 loan program is a partnership between Premier Capital, a Certified Development Company (CDC), and a lender to provide permanent financing to eligible businesses for the purchase, renovation or expansion of owner occupied commercial real estate. The 504 program can also be used for fixed equipment that has a useful life of at least ten years. The primary mission of the 504 program is to create jobs.
Certified development companies are authorized by the SBA to administer the 504 program. Premier Capital, like most CDCs, is a private not-for-profit company. On a typical project the borrower will provide a 10% equity injection, the lender will provide permanent financing on 50% of the project and the remaining 40% is provided by the 504 program.
The 504 program does not use tax payer dollars as their source of funding. Each month the CDCs across the U.S. (approximately 250) pool their projects, and through underwriters, auction the pool to investors as U.S. backed debentures.