Program
How SBA 504 actually works
94,996 loans since 2010, financing $74.26B of SBA seconds alongside $99.43B of bank first mortgages. For owner-occupied property and heavy equipment it is usually the cheaper deal, and almost nobody compares properly.
Find a CDC for your 504 project →
Counted loan by loan, 504 is barely safer than 7(a)
5.0% of seasoned 504 loans charged off within seven years, against 5.7% for 7(a) — a slim edge, not the “less than half” you get by weighting dollars. It is mostly a mix effect: 7(a) makes far more of the small loans that fail most. Compare loan-for-loan at the same size, and in the $350k–$2M range where most 504 deals sit, 504 actually defaults slightly more. 504’s real edge is a fixed 25-year rate and real-estate collateral — not a dramatically lower default rate.
How a project is actually financed
observed, not textbookTextbooks say 50/40/10. Across 95,000 real loans the CDC portion is nearer 45% of the financed amount. Your own injection sits on top and is typically 10%, more for a startup or a single-purpose building.
When 504 loans fail
share of failures by yearLater than 7(a), which is what you would expect from a longer term and a fixed payment.
What gets financed
How deals are processed
Accredited and Premier Certified CDCs can approve without sending the file to SBA — the 504 equivalent of a preferred lender, and worth asking about.
The whole program, year by year
cumulative % of CDC dollars charged off| Approved | Yr 1 | Yr 2 | Yr 3 | Yr 4 | Yr 5 | Yr 6 | Yr 7 | Yr 8 | Yr 9 | Yr 10 |
|---|---|---|---|---|---|---|---|---|---|---|
| 2010 | 0.0 | 0.0 | 0.4 | 0.8 | 1.2 | 1.5 | 1.8 | 1.9 | 1.9 | 2.0 |
| 2011 | 0.0 | 0.0 | 0.1 | 0.4 | 0.8 | 1.0 | 1.2 | 1.5 | 1.5 | 1.5 |
| 2012 | 0.0 | 0.0 | 0.1 | 0.3 | 0.6 | 0.8 | 1.1 | 1.3 | 1.4 | 1.5 |
| 2013 | 0.0 | 0.0 | 0.2 | 0.3 | 0.4 | 0.7 | 0.7 | 0.8 | 1.0 | 1.1 |
| 2014 | 0.0 | 0.0 | 0.0 | 0.1 | 0.4 | 0.6 | 0.8 | 1.0 | 1.1 | 1.1 |
| 2015 | 0.0 | 0.0 | 0.0 | 0.1 | 0.3 | 0.4 | 0.5 | 0.7 | 1.0 | 1.1 |
| 2016 | 0.0 | 0.0 | 0.0 | 0.2 | 0.4 | 0.6 | 0.7 | 0.9 | 0.9 | · |
| 2017 | 0.0 | 0.0 | 0.1 | 0.2 | 0.3 | 0.5 | 0.6 | 0.6 | · | · |
| 2018 | 0.0 | 0.0 | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | · | · | · |
| 2019 | 0.0 | 0.0 | 0.1 | 0.1 | 0.1 | 0.2 | · | · | · | · |
| 2020 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | · | · | · | · | · |
| 2021 | 0.0 | 0.0 | 0.0 | 0.1 | · | · | · | · | · | · |
| 2022 | 0.0 | 0.0 | 0.0 | · | · | · | · | · | · | · |
| 2023 | 0.0 | 0.0 | · | · | · | · | · | · | · | · |
| 2024 | 0.0 | · | · | · | · | · | · | · | · | · |
| 2025 | · | · | · | · | · | · | · | · | · | · |
| 2026 | · | · | · | · | · | · | · | · | · | · |