The money that makes America work.

The 504 is the SBA's economic development instrument that supports American small business growth and helps communities through business expansion and job creation. The SBA 504 loan program provides long term, fixed rate subordinate mortgage financing for acquisition and/or renovation of capital assets including land, buildings and equipment. Virtually all types of for-profit small businesses are eligible for this program.

The SBA 504 loan is processed through the cooperation of a Certified Development Company and participating bank. The Certified Development Company (CDC) is a non-profit organization established for the purpose of increasing business opportunities and stimulating employment. It is the CDC's goal to benefit the entire area of its operation through increased employment, sales volume and profits. The CDC assists the small business to obtain commercial loans through private sources in cooperation with the U.S. Small Business Administration.

The SBA 504 loan is distinguished from other SBA loan programs in these ways:

* Lower down payment. Allows a small business to conserve valuable operating capital by injecting a down payment of just 10 percent of the total project cost. SBA provides 40% up to a current maximum of $1.3 million and the bank provides 50%.

* SBA fixed interest rate. Borrower knows the cost of occupancy for the next 20 years. Rate is usually below market rate.

* All project costs can be financed including acquisition of land and building, land and construction of a new building, renovations, certain machinery and equipment, soft costs such as title insurance, appraisal, environmental, legal and bridge loan fees.

* Collateral is typically the assets financed. This allows other assets to be free of liens and available to secure other needed financing.

* Long term real estate loans are for 20 years, heavy equipment for a 10 or 20 year term and both amortized over the life of the loan.

* The 504 program encourages banks and other lenders to make loans in the first position on reasonable terms, helps them retain growing customers and provides Community Redevelopment Act (CRA) credit.

* The 504 program benefits the borrower's community through job creation and retention. Businesses that are eligible for 504 loans are:

* Small with a net worth of less than $7 million and with a net profit after taxes of less than $2.5 million.

* Organized for profit.

* Any type of business, retail, service, wholesale or manufacturing.

The SBA's Certified Development Companies (CDCs) serve the community by financing business expansion needs. Their professional staff works directly with the borrower and participating bank to tailor a financing package that meets program guidelines and the credit capacity of the business.

Information for this article was provided by Landmark Certified Development Corporation. To learn more, please contact 562-690-6400 or visit the website at www.landmarkcdc.org. To learn more about the North Los Angeles Small Business Development Center, please call Ajay Patel at 818-552-3321 or visit www.sfvsbdc.org.