What dollars and occupancy fractions are actually published?
Everything else is the CDC's quote: special-use extra equity, refinance notices, and whether a particular crane bay is eligible real estate. HedgeStone will not invent a fourth cap.
Buying with a 7(a) remains the operating-company product. 504 is the plant and long-life equipment product. Buying the plant with the business is how those two products sit in one close.
How does the 50 / 40 / 10 stack fail on a special-use shop?
Market practice often looks like a bank first lien near half, a CDC second near 40%, and equity near 10%. Special-use industrial and some startups are quoted at 15–20% equity. A food room, a plating line, or a one-tenant crane building is where that extra cash appears. Do not hide the extra equity inside a juiced operating multiple.
| 504 item | Published or common practice | What breaks it |
|---|---|---|
| Debenture cap | $5.0M standard / $5.5M small-manufacturer project | Affiliates already using capacity |
| Occupancy | ≥51% existing / ≥60% new | Third-party tenant too large |
| Combined 7(a)+504 | Up to $10M context after 2026-07-04 | Treating a blog as the authorization |
| Equity | ~10% typical; more if special-use | Seller note that is not equity |
| Appraisal | Independent real-estate appraisal | Broker opinion of the company reused as the plant value |
A seller note that helps a 7(a) injection is a 7(a) rule (full standby, ≤50% of the 10%). It is not automatically 504 equity. Ask the CDC, not a forum.
What diligence does a CDC add that a cash buyer might skip?
A current Phase I when industrial use exists, a real-estate appraisal, evidence of occupancy, a machine list if long-life equipment is in the project, and the same three-year financial package the 7(a) lender wants. Capacity utilization on the Federal Reserve G.17 print was 76.0% in July 2026 (Source: Fed G.17). That print does not replace a floor tour. The CDC will still ask whether the buyer will actually occupy the fraction they claim.
Environmental transfer statutes are state-specific. New Jersey ISRA can attach when an industrial establishment transfers in that state. Do not invent a twin statute for a 504 in Indiana or Texas. Indiana has a disclosure law. Most states do not have an ISRA clone.
When should a buyer refuse 504 and rent instead?
If the seller will not sell the dirt, 504 cannot buy it. If occupancy fails, 504 cannot paper over the tenant. If the building is the prize and the company is a rounding error, you may be in a real-estate conversation that does not need a CDC. Owner-occupied plants walk through the keep-versus-sell election. This page walks through the occupier-loan that appears only after someone elects to sell the plant.
Refinance programs exist on notice-specific terms. This page will not claim a 504 refinance is always open. Verify the current notice before anyone writes that sentence into an LOI.
What does a 22,000-square-foot existing fab with a third-party storage tenant look like?
A 35-person metal fabricator occupies 16,000 square feet and rents 6,000 to a logistics tenant. 16,000 of 22,000 is about 73%, so the 51% existing-building test is not the problem. The problem is whether the tenant's use, remaining term, and exit match the buyer's process and the CDC's occupancy file. If the buyer needs the 6,000 for a paint line, the tenant must leave on a calendar the 504 can survive.
The project wants the $5.5 million small-manufacturer cap only if NAICS 31–33 and U.S. production fit the SOP definition the CDC applies. Self-labeling "we make things" is not the test.
Jason Taken is a business broker. He does not make 504 eligibility calls, issue debentures, or appraise plants. Educational information only. Use the published caps and occupancy fractions, then let the CDC apply the SOP that governs the loan number — SOP 50 10 8 for most 2026 applications, SOP 50 10 8.1 for loan numbers on or after 2026-10-01. Data current as of September 2026.
A 504 plant-week that does not leak the sale
Monday. Confirm the seller will actually convey the deed. A leaseback speech kills the 504 path.
Tuesday. Measure occupancy from the floor plan, not from memory. Count the tenant.
Wednesday. Order or update Phase I and identify the real-estate appraiser the CDC will accept.
Thursday. Line up the 7(a) operating request and the 504 project so the combined story matches the 2026-07-04 notice.
Friday. If special-use equity is likely, say the cash number before anyone writes an LOI that assumes 10%.
Confidentiality. CDC site visits still look like vendor visits. Do not put 'SBA' on a visitor badge.
How should affiliates and a second plant be counted before anyone quotes $5.5 million?
504 capacity is per small business plus affiliates. A buyer who already owns a shop, or whose spouse does, can be in an affiliation conversation before the teaser is pretty. The $16.5 million accumulated manufacturer eligibility that some CDC guides cite is a special accumulated figure, not a first-deal promise. Do not put $16.5 million in an LOI because a blog mentioned it.
Ask the CDC to run affiliation early. It is cheaper than rewriting a purchase agreement in week ten.
What job-opportunity math should a thin-headcount automation cell expect?
A highly automated cell with twelve people and a large building can fail a job test that a 70-person labor-heavy plant would pass. The 2025-10-01 figures — $95,000 guaranteed per job opportunity, or $150,000 on small-manufacturer or energy public-policy projects — are the published yardsticks. The CDC applies them. Do not invent a third yardstick.
If the file is really an equipment story, ask whether 504 long-life equipment eligibility is the better slot than stretching a plant purchase the occupancy test does not like.
How should a first-time operator talk to a CDC without promising jobs they will not hire?
Speak in scheduled hires tied to backlog, not in a slogan about reshoring. Deloitte and the Manufacturing Institute have estimated 3.8 million workers needed in 2024–2033 with 1.9 million potentially unfilled (Source: Deloitte/MI). That labor market is why a promised second shift may not appear. A CDC would rather see a conservative occupancy-and-jobs story than a patriotic forecast.
HedgeStone will introduce process. We will not promise an authorization.
How should long-life equipment ride on a 504 project without stealing the plant appraisal?
504 can include eligible long-life equipment. Serial-numbered presses and HVAC that is part of the building are different appraisal problems. Do not let the equipment list and the real-estate appraisal count the same air handler twice. The CDC will notice. A qualified M&E appraisal on a named standard (OLV, FMV, or FLV — pick one) sits next to the plant appraisal. They do not share a cover page.
If the project is mostly iron and a cheap shell, ask whether 7(a) plus equipment finance is the cleaner stack. Pride about using 504 is not a reason to force a plant purchase the occupancy test dislikes.
What prepayment, assumption, and due-on-sale facts should a buyer read before falling in love with the existing mortgage?
Some sellers want the buyer to wrap or assume a cheap plant loan. Assumption is a lender decision. Due-on-sale is real. A 504 new-money project is often cleaner than a creative wrap a credit union will not bless. Read the note. Do not take the seller's memory of the rate as the document.
Prepayment penalties on the seller's loan are a net-proceeds item for the seller, not an add-back to the buyer's SDE.
How should a multi-shift plan and a mezzanine office count toward occupancy without gaming the fraction?
Occupancy is use of the building, not a story about future hires. A mezzanine of unused offices does not become "occupied" because someone put a plant drawing on the wall. A planned second shift is a jobs story, not square footage you already occupy. Measure the floor. If a third-party tenant is staying, their space is not yours.
HedgeStone will not help a buyer certify 51% on a drawing that includes a hope. The CDC site visit is a tape measure.
SOP 50 10 8.1 applies to SBA loan numbers issued on or after 2026-10-01. Confirm which SOP governs the number, not the term-sheet date. A plant purchase that was sketched under 8.0 can still close under 8.1 documentation if that is the loan number the CDC issues. Ask before anyone treats last quarter's training slide as the live rule. Energy public-policy projects can share the $5.5 million per-project figure; they are not a manufacturing self-label. The CDC applies the definition. Do not write "energy" into an LOI to chase a higher cap.