Quick Guide to CDC Small Business Finance

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CDC Small Business Finance: There are several reasons a business owner needs to borrow money. Examples include investing in new equipment or expanding operations, improving staff training and development, and improving health benefits and pay, among other things.

A Small Business Administration loan might be ideal for you and your company.

In this post, we’ll look at a quick guide to CDC Small Business loans so you can choose the best one for your business.

What is CDC?

Certified Development Companies (CDCs) are nonprofit companies authorized and licensed by the Small Business Administration to package, handle, close, and service “504” loans.

The Small Business Investment Act approved the 504 Loan Program.

The regulations regulating the 504 programs can be found in 13 CFR Parts 103 and 120. (Sections 120.800 – 120.991 refer exclusively to the Development Company Loan Program).

What is CDC Small Business Finance?

In San Diego, California, CDC Small Business Finance provides a business financing service.

CDC Small Company Finance, founded in 1978, provides small business loans in three states throughout the United States.

They have made $21.3 billion in funding available to over 12,000 small business owners.

What Category of Loan Does CDC Small Business Finance Provide?

Small business loans are not all the same. The range of interest rates and terms you receive will be determined by the type of business loan you select.

CDC Small Business Finance offers the following categories of business loans:

Term Business Loans with Security
Loans from the SBA
Loans for Commercial Real Estate

What is the 504 Loan Program?

The CDC/504 Loan Program provides long-term, fixed-rate funding for important fixed assets that help businesses develop and create jobs.

Certified Development Companies (CDCs), the SBA’s community-based partners who govern NGOs and encourage economic development in their areas, offer 504 loans. The SBA certifies and regulates CDCs.

A 504 loan has a maximum lending amount of $5 million. For selected energy projects, the borrower can get a 504 loan for up to $5.5 million per project, with a total loan of $16.5 million.

Business Eligible for 504 Loan

To be eligible for a 504 loan, your business must meet the following requirements:

Own and operate a for-profit business in the United States or its territories.
Have less than $15 million in tangible net worth
Have a net income after federal income taxes of less than $5 million in the two years before your application.

Other qualifying requirements include conforming to SBA size restrictions, competent managerial competence, a viable company strategy, excellent character, and the capacity to repay the loan.

Also, loans are not available to charitable, passive, or speculative enterprises.

Small companies and lenders are advised to contact a Certified Development Company in their region for further information on qualifying criteria and loan application procedures.

What Do You Need to Qualify for CDC Small Business Finance Business Loans?

Borrowers do not need to have been in the company for a certain number of years to qualify for CDC Small Business Finance Business Loans. To be eligible, businesses must have a minimum yearly revenue of $7,600.

CDC Small Business Finance Business Loans may be available to applicants with credit scores ranging from 640 to 850.

The Military Lending Act (32 C.F.R. 232) bans lenders from charging more than 36% APR on credit granted to eligible borrowers to military personnel.

Because the APRs for the CDC Small Business Finance Business Loans product exceed the MLA restrictions, the applicants cannot access this product.

Under the Military Lending Act, active duty service personnel and their covered dependents are considered “covered borrowers.”

Of course, US nationals are eligible for the services provided by CDC Small Business Finance Business Loans. Permanent residents and holders of green cards are eligible to apply.

Applicants are to produce the following paperwork to qualify:

Income documentation
Identity verification

What is the Maximum Loan Term You Can Get from CDC Small Business Finance?

Small business loans ranging from 36 to 300 months are available through CDC Small Business Finance.

More extended periods enable borrowers to take on higher loan amounts while making monthly payments more reasonable. The longer the loan period, the more interest you will pay.

Conclusion

Most firms begin small and will ultimately require a business loan to grow. However, there are several variations in loan terminology, loan kinds, lending businesses, and the requirements for each.

We hope this article has provided you with the basics of obtaining business financing for your small business.

FAQs

What is a CDC lender?

The CDC/504 loan program is a long-term funding strategy for neighborhood economic development. The 504 Program offers long-term, fixed-rate financing for critical fixed assets such as equipment or real estate to expanding enterprises.

How much time does it take to obtain an SBA 504 loan?

The time it takes to have an SBA 504 loan authorized might vary greatly, but it usually takes between 60 and 90 days. It may take up to six months in some cases.

How does the CDC acquire its funding?

Aside from Congressional financing, the CDC gets around $12 million worldwide funding from foundations and other contributors such as the Bloomberg Family Foundation, the Bill and Melinda Gates Foundation, and the CDC Foundation.

How much money can you get through CDC small business finance?

Business loan amounts range from $10,000 to $2,000,000.

Does CDC small business finance charge an origination fee?

Yes, CDC Small Company Finance charges a loan origination fee that starts at 0% of the business loan amount.

Before disbursing loan funds, CDC Small Company Finance deducts the cost from your business loan amount, so make sure to factor this fee in when determining how much you need to borrow.