Acquisition + improvements + soft costs
2026 typical: 6.5-7.5% on 10-yr fixed
2026 typical effective rate ~5.5-6.5%
Total Monthly P&I
$15,920
Bank + CDC combined
Bank first (50%)$1.5M
CDC debenture$1.2M
Your equity$300K
Bank P&I$10,832
CDC P&I (25yr fixed)$7,724
How the 504 Structure Works
The 504 is the only commercial loan in the United States that combines 90% financing with a 25-year fixed rate on a meaningful chunk of the deal. Here's how the math works:
- Conventional first mortgage: A bank or non-bank lender provides 50% of total project cost as the senior loan. Rate is set by the bank; amortization typically 25 years with a 10-year reset.
- CDC debenture: A Certified Development Company provides up to 40% of project cost (35% for special-purpose, 30% for new businesses) at a fixed rate amortized over 20-25 years. This is the SBA-backed portion.
- Borrower equity: 10% standard, 15% special-purpose, 20% new business.
What's Not in This Calculator
- SBA debenture fees (~3% one-time, financed into the CDC loan)
- CDC processing fee (~0.5% one-time)
- Bank fees (variable)
- Title, environmental, and appraisal costs
The 504 advantage in one number: 35-40% of your project cost is locked at today's CDC rate for 25 years, fully amortized. On a $3M deal that's $1M-$1.2M of permanently fixed debt — a powerful hedge against future rate increases.
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