Those who have investigated financing options have probably seen references to Certified Development Companies (CDCs), but they may not be fully aware of what a CDC is or what role they play. CDCs are nonprofit organizations that are certified by, but independent of, the Small Business Administration (SBA). There are 230 CDCs around the country, each with a specific regional focus. They work in conjunction with conventional financial institutions to provide funding for businesses that would otherwise have less access to high-quality financial resources.
CDCs administer SBA 504 loans, which can be used to acquire land, buildings or equipment, or for renovations and business upgrades. They also help applicants for SBA 7(a) loans for the purchase or construction of real estate, acquisition of equipment, working capital or inventory. Most importantly, CDCs improve community economic development, stimulating the growth and expansion of small businesses and helping local communities thrive.
A Short History of Certified Development Companies
It all started in 1958, only a few years after the founding of the SBA, with the passage of the Small Business Investment Act. The first development companies were called Small Business Investment Companies (SBICs). Like CDCs, they are independent of the SBA but licensed by it. Taking advantage of SBA underwriting, they provide both debt and equity financing. But as the U.S. economy and the country’s social needs have evolved, so has the SBA. SBICs don’t provide project or real estate financing, so CDCs emerged to better meet the needs of more established businesses—ones ready to buy their own premises or that want to expand through upgrades or the purchase of new equipment.
What CDCs Offer The Community
CDCs are tightly integrated into the local economy. They work with the SBA to provide offerings that span a host of unique business needs. This in turn strengthens local businesses by helping them become property owners and, at the same time, fostering neighborhood revitalization and long-term community growth.
A striking example of this is TMC Financing’s success in Oakland’s Laurel District, where it has helped four businesses—two restaurants, a hardware store and a dental office—buy their own buildings and embrace continued growth. These beloved community businesses have made a big contribution to revitalizing the neighborhood.
Meanwhile, in Las Vegas, TMC Financing helped finance the construction of the Robert T. Eglet Advocacy Center, an $18-million showplace with crystal chandeliers, tin ceilings and hardwood floors. It is the headquarters of the Eglet Prince law firm and also has a full-sized, state-of-the-art courtroom for the UNLV William S. Boyd School of Law, a full gym with showers, and 75,000 square feet of parking, wired for up to 125 electric car charging stations. It is a landmark that will serve the community for generations.
CDCs are also dedicated to meeting public policy goals by supporting businesses owned by women and veterans, as well as businesses located in historically underutilized business zones (otherwise known as HUBZones). In addition, the Green Energy Program provides 504 loans with special benefits for sustainable, energy-efficiency upgrades.
But a CDC’s role is more than financial. They are home to experts who have vast knowledge of the local economy and business environment, as well as the resources available to business owners. CDC experts can provide invaluable information and guidance to their clients, in addition to loan funds.
TMC Financing has been operating for more than 40 years. They are an SBA Premier Certified Lender and a high-volume loan provider. Contact a TMC loan expert to find out more about the 504 loan program.
- What Is a Certified Development Company? - May 12, 2022
- The SBA 504 Program: Why It’s an Optimal Finance Solution for Self-Storage Operators - June 22, 2020
- Turn Equity Trapped in Real Estate into Cash with the SBA 504 Program - April 23, 2020