What is an SBA Certified Development Company?

If you have been researching SBA loans, it is likely that you have come across the phrase “Certified Development Company” or seen the acronym “CDC.” A Certified Development Company is a type of non-profit institution that partners with the SBA and lenders to provide financing to local small businesses. As an SBA CDC in Virginia specializing in 504 loans, 504 Capital is here to help pull back the curtain on CDCs and give you all the information you need to understand.

SBA-Certified Development Companies

The Small Business Administration (SBA) is a federal agency of the United States government that works to provide small businesses with the capital needed to be successful. The SBA does this by partnering with various banks and lending institutions to back loans. A Certified Development Company (CDC) is a non-profit institution that partners with the SBA to provide loans to businesses in their communities. 


CDCs work with businesses to get them approved by the SBA for business loans that help them achieve their business goals. In addition, CDCs are certified and regulated by the SBA to ensure that they meet specific standards and work with the community. 

Types of Loans Offered by CDCs

The SBA authorizes Certified Development Companies to provide specific CDC business loans. While most CDCs choose only to provide 504 loans, others will offer Microloans or 7(a) loans.

CDC 504 Loan 

  • Used to purchase real estate or equipment and to finance construction projects.

  • Loan amount: Up to $16.5M 

Microloans

  • Typically used to increase working capital.

  • Loan amounts: Up to $50,000

7(a) Loans

  • Used for short- and long-term working capital, refinance current business debt, or purchase furniture, fixtures, and supplies. 

  • Loan amount: Up to $5 Million

Benefits of Working with a CDC

There are several benefits to working with a CDC. These benefits include focusing on long-term success, leveraging business partnerships, and providing easier and faster approval. In addition, the loans themselves are preferable for many individuals because they offer:


  • Longer repayment periods

  • Fixed interest rates

  • Smaller down payments

  • Below-market rates

Focus on Long-Term Success

A CDC is a loan partner. They want to ensure that your business is successful in the long run. Many CDCs offer educational resources that businesses can take advantage of and create a more profitable business. Because CDCs are designed to bolster the local economy and communities, they are required to provide so many CDC business loans a year to maintain their SBA certification. Your business's success results in their success, which ensures they do everything in their power to assist you.

Leverage Business Partnerships

CDC business loans are sourced from multiple lending institutions. One lending institution typically provides about 50% of the funding, this could be a bank, credit union, private lender, or commercial lending company. The other 40% of the funding is the SBA-backed portion. These two funding sources provide up to 90% of the funding for your purchase. The other 10% is required from the small business applicant. CDCs need to have a wide variety of business partnerships with several lending institutions in your area. This allows them to leverage their partnerships to get you a good deal and the best possible financing option.

Easier & Faster Approval

The traditional loan process is long and drawn out. When you work with a CDC, they are able to provide faster and easier approvals, ensuring that you get the funding in a timely manner. This is ideal for small businesses on a time crunch that want to purchase real estate or land. 

504 Capital—A Dependable SBA Certified Development Company in Virginia, Maryland, and North Carolina

Are you looking for a CDC in the Virginia, Maryland, or North Carolina area? 504 Capital is an SBA CDC in Virginia, Maryland, and North Carolina. Our team of financial professionals works directly with you to get the best possible deals on your CDC 504 loan. We understand that CDC business loans can be difficult to understand, so we work with you every step of the way—ensuring you get the financing you need to make strategic business moves. 


Call 757-623-2691 or visit us online to see how we can help.
Location: Chesapeake, VA, USA

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