The Small Business Administration (SBA) works in tandem with lenders to offer loans to small businesses. By reducing the risk, lenders may more easily access capital for small business loans, thus making it easier for small businesses to obtain loans. However, this federal agency does not make loans directly to small business owners. Rather, it formulates and establishes guidelines for loans made by its various lending partners, including banks, community development organizations, and micro-lending institutions.

The SBA 504 Loan program is an advantageous economic development loan program that provides small businesses with another option for business financing, thus promoting the growth of the business, including the creation of jobs and acquisition of fixed assets for business expansion or simply modernization. As of February 15, 2012, $50 Billion in SBA 504 loans has created over 2 million jobs, thus establishing the program as a viable option for advancing the success of small businesses.

Long-term, fixed-rate loans through the 504 Loan Program are made available through Certified Development Companies (CDCs), the SBA’s community-based partners for providing 504 Loans. Through 504 Loans, CDCs, all of which are nonprofit corporations, promote economic development within its community base.

The SBA certifies and regulates CDCs, who work with the SBA and its lending partners to further community goals of economic development by providing financing to small businesses. There are over 270 CDCs nationwide with each having a defined “Area of Operations” within a specific geographic area, such as the state in which they are incorporated.

CDCs originated in 1958 when Congress enacted the Small Business Investment Act. At this time, Small Business Investment Companies (SBICs) commenced operations to assist business owners successfully maneuver through the loan process. As the needs of borrowers evolved and transformed, the services provided by SBICs were insufficient to serve the complete range of small businesses.

In turn, Certified Development Companies were established to assist the financing of real estate and other projects, which were actions of which the SBICs were incapable. In 2020, CDCs aid business owners who desire to expand their business and upgrade their operations by purchasing real estate or investing in new equipment.

An important facet of CDCs is their relationship with the community it serves. CDCs are intended and designed to help strengthen and support local businesses and economies, thus, allowing communities to maintain their vitality and avoid stagnant growth periods.

CDCs also focus on achieving specific public policy goals, such as giving special attention to the support of women and minority business owners, while assisting veterans. To these ends, CDCs offer useful information to business owners, including advice and guidance in operating their businesses.

The attorneys at Glass & Goldberg in California provide high quality, cost-effective legal services and advice for clients in all aspects of commercial compliance, business litigation, and transactional law. Call us at (818) 888-2220, send an email inquiry to or visit us online at to learn more about the firm and to sign up for future newsletters.

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