What is a 504 Loan?

  • Federal financing for fixed assets
  • Low, fixed interest rate
  • 20 year lifespan
  • 10% down

The 504 loan allows a small business to obtain fixed assets – such as land, building, machinery & equipment – at a very low 20 year fixed interest rate, requiring as little as 10% down.

BEFCOR works in partnership with a bank which lends 50% of the project amount and acquires a first lien position. The 504 loan provides up to 40% of the project financing having a second lien position. The business contributes the remaining amount to complete the project.

What are the advantages of a 504 loan?

The 504 loan portion of the project financing carries a competitive, fixed rate of interest coupled with a low down payment (as little as 10%), and a 20-year term (10-years for projects that are only for machinery & equipment acquisitions).

With a first lien on collateral, the bank holds as security twice the value of the funds it provides. That allows the bank to offer favorable interest rates and loan terms for the 504 projects being financed. The result is a financing package that will likely be more favorable to the borrower than other available funding arrangements.

More information for Existing Borrowers or Prospective Borrowers