# Can a startup get an SBA 504 loan?

**Short answer:** Yes, but with a higher contribution. A business operating 2 years or less counts as new. The usual structure is then 50% third party lender, 35% CDC debenture, 15% borrower. Source: SOP 50 10 8.1, Sec. C, Ch. 1, Para. B.

Canonical page: https://www.sbaexpress.loans/answers/can-a-startup-get-an-sba-504-loan/
Last checked: 2026-11-08

In this answer, CDC means Certified Development Company.

Yes. In the 504 program, SBA's term for a startup is New Business. SOP 50 10 8.1 defines one as operating for 2 years or less when the loan is approved (App. 3, p. 297).

## The structure changes

- New business: 50% third party lender, 35% CDC debenture, 15% borrower.
- New business with a limited or special purpose property: 50% third party lender, 30% CDC debenture, 20% borrower.

Source: Sec. C, Ch. 1, Para. B (p. 221).

## What the CDC needs

A new business has little history, so the Certified Development Company (CDC) relies on projections (Sec. C, Ch. 1, Para. E.1.d).

- At least 2 years of projections, with assumptions the CDC must justify.
- A monthly cash flow analysis for the first 12 months or 3 months past breakeven, whichever is longer (Para. F.2).
- A pro forma balance sheet with assumptions (Para. F.2).
- If projections show repayment in Year 2 but not Year 1, enough liquidity to cover the shortfall.

## What new businesses cannot use

- Debt refinance without expansion requires two full years of operation (Para. C.10).
- The 10% energy reduction category excludes new businesses (Para. A.2).

## How 7(a) differs

A 7(a) start-up must inject at least 10% of total project costs. For that test, a start-up is a business in operation for 1 year or less (Sec. B, Ch. 1, Para. C, p. 118). The 504 program draws its line at 2 years.

## Sources

- [SOP 50 10 8.1, App. 3 (p. 297)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. C, Ch. 1, Para. B (p. 221)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. C, Ch. 1, Para. E.1.d (Para. E begins p. 242)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. C, Ch. 1, Para. F.2 (Para. F begins p. 257)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, Sec. B, Ch. 1, Para. C (p. 118)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.910](https://www.ecfr.gov/current/title-13/section-120.910)
- [13 CFR § 120.920](https://www.ecfr.gov/current/title-13/section-120.920)