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Definition

What Is a Certified Development Company?

A Certified Development Company is a nonprofit licensed by the U.S. Small Business Administration to provide the government-backed portion of an SBA 504 loan. Every 504 loan requires one. Nevada State Development Corporation, founded in 1981, is the oldest, largest, and only statewide CDC in Nevada with Premier Certified Lender status.

What a CDC is, and why one is in your deal

Who NSDC is inside the transaction, and what the SBA licenses a CDC to do.

NSDC explainer film.

Why a 504 loan needs one

The 504 program is built in three parts. A bank makes a first mortgage for 50% of the project. A CDC delivers the SBA-backed second mortgage for 40%. You put in 10%. The bank does the 50, the CDC does the 40, you do the 10.

  1. 50% Bank or credit union First lien. Its own rate and term.
  2. 40% SBA 504 through NSDC Second lien. Fixed for 10, 20 or 25 years.
  3. 10% You Cash or equity you already hold.
The standard 504 structure. Start-ups (two years or less in business) and special-purpose properties put in 15%; both together, 20%. The bank half never changes.

You cannot get an SBA 504 loan without a Certified Development Company, and that's exactly what NSDC is.

What the CDC actually does

  • Structures the deal with you and your bank, so the two loans fit together.
  • Packages the SBA side: the application, the eligibility analysis, the authorization request.
  • Approves it. As a Premier Certified Lender, NSDC approves in-house rather than sending the file to the SBA and waiting.
  • Funds it through the debenture, the government-guaranteed bond sold monthly that sets your fixed rate. What a debenture is.
  • Services the loan for its full life. Payments, payoffs, questions, changes of ownership: the same office, for 25 years if that's your term. What happens after you close.

CDC and your bank: you need both

Your bankNSDC, the CDC
First mortgage, 50% of the projectSBA-backed second mortgage, 40%
First lienSecond lien
Sets its own rate and termRate fixed at the monthly debenture sale for the full term
Keeps your deposit and treasury relationshipNever competes for it; a CDC doesn't take deposits
Services its own loanServices the SBA loan for its life

It's not a versus. Two lenders, one closing, one building.

What makes one CDC different from another

Honestly, three things. How fast it can approve, which depends on whether it holds Premier Certified Lender status and can decide in-house. Whether it services its own loans or hands them off. And whether it knows your market: the appraisers, the lenders, the property types that trip environmental review.

NSDC's claim, stated once: Nevada's oldest, largest and only statewide CDC, a Premier Certified Lender, servicing every loan it closes from offices in Las Vegas and Reno, since 1981.

Common questions

Do I pick the CDC, or does my bank?
Either. Many borrowers come to us first and we introduce a bank; many banks bring us the deal. You're free to choose your CDC.
Is a CDC a lender?
Yes, for the SBA portion. It's a nonprofit lender licensed by the SBA, not a bank, and it doesn't take deposits.
Does it cost more to go through a CDC?
The CDC's fees are part of the SBA's published 504 fee structure, roughly 3% of the SBA portion, normally financed into the loan. The fee breakdown.
What's a debenture?
The government-guaranteed bond that funds the CDC portion, sold to investors monthly. Its price sets your fixed rate. More.