Certified Development Companies and SBA 504 Loans (CDCs)

Definition

A certified development company (CDC) is an entity the Small Business Administration authorizes to deliver 504 financing to small businesses.^[3] In a typical 504 project, the business puts in at least 10 percent, a CDC loan funded by an SBA-guaranteed debenture covers up to 40 percent, and a private lender covers the rest.^[4]

Federal law

1. Small Business Investment Act of 1958, title V (Loans to State and Local Development Companies), Pub. L. 85-699, title V, §§ 501–502, 72 Stat. 689, 696–697. Authorized SBA loans to state and local development companies for plant construction, conversion or expansion (title V, §§ 501–502). Official text: govinfo.gov, U.S. Government Publishing Office.
2. Small Business Investment Act amendments (development company debentures), Pub. L. 96-302, § 113, 94 Stat. 833, 837–838. Added § 503 to the Small Business Investment Act, authorizing SBA guarantees of debentures issued by qualified state or local development companies (15 U.S.C. § 697). Official text: govinfo.gov, U.S. Government Publishing Office.

Federal regulations

Rules issued by federal agencies under the laws above.

3. Business loan program definitions (Certified Development Company), 13 CFR 120.10 (Small Business Administration). Defines Certified Development Company as an entity authorized by SBA to deliver 504 financing. Official text: govinfo.gov, U.S. Government Publishing Office.
4. How a 504 Project is financed, 13 CFR 120.801 (Small Business Administration). Source of the 10 percent borrower contribution and 40 percent CDC debenture loan structure. Official text: govinfo.gov, U.S. Government Publishing Office.