SBA 504 Loans

The 504 Loan Program is one of the “Best Financing Tools Available” for your growing business.

MADC is certified by the U.S. Small Business Administration (SBA) to provide financing for small businesses using the SBA 504 Loan Program. This loan program provides small businesses with financing for the purchase of long-term fixed assets such as owner-occupied commercial/industrial property purchases including equipment within the 13 county area of Middle Tennessee.

MADC partners with a private lender (bank) who typically finances 50% of the total project cost in a first lien position loan. MADC provides financing for up to 40% of the total project cost in a second lien position loan, with an affordable, long-term fixed rate. The borrower typically puts down as little as 10% of the total project cost.

Example: Day Care Center
1st Mortgage Lender $600,000 (50%)
MADC SBA 504 Loan $480,000 (40%)
Borrower Equity $120,000 (10%)
Total Project $1,200,000

Small Business Owner Advantages:

  • Low Borrower Injection (as little as 10%)
  • Up to 90% financing, to preserve working capital
  • Fixed Rate up to 40% of Total Project Cost
  • Low Market Interest Rates

Private Lender (Bank) Advantages:

  • Reduced Risk with 50% Loan to Value
  • First Lien Position on Assets Financed, and are Salable on the Secondary Market
  • Saves A/R and Inventory for Additional Financing
  • Enhanced Portfolio Diversity with CRA Qualified Debt

Eligible Use of Funds:

  • Land and Building Acquisition
  • Building Expansion
  • Building Construction or Renovation
  • Machinery and Equipment

Eligible Businesses:

The company must be a for-profit corporation, partnership, LLC, or proprietorship whose tangible net worth does not exceed $15 million, and whose average profit after tax for the preceding two years, does not exceed $5 million.

Project Size:

Private Lender: the maximum loan amount of the private lender is not limited by the SBA. However, the private lender must fund at least 50% of the total project cost.

Maturity Terms:

  • 20 years for Real Estate
  • 10 years for Long-term Machinery and Equipment

Interest Rate:

  • Private Lender: Rate is negotiated with the small business owner
  • SBA: Rate is fixed for the term of the loan

Ineligible Businesses:

  • Passive Investment Companies
  • Real Estate Investment Companies
  • Non-Profit Corporations
  • Financial Institutions


To help the government fight the funding of terrorism and money laundering activies, Federal law requires all Certified Development Companies to obtain, verify, and record information that identifies each person who applies for a 504 loan.