SBA 504 Loans
🏆Most Popular for Real Estate
💰 Only 10% Down
📊 Fixed Rates
What is an SBA 504 Loan?
The SBA 504 loan program helps small businesses purchase major fixed assets — primarily commercial real estate and heavy equipment. It’s structured as a partnership between a bank (50%), a Certified Development Company (40%), and you (10%).
This structure allows for just 10% down while locking in below-market fixed rates on the CDC portion for up to 25 years. On a $2M property, that’s $200K-$400K less cash upfront compared to conventional financing.
Best Uses for SBA 504
🏢 Commercial Real Estate
Purchase or construct owner-occupied office, retail, industrial, or mixed-use properties.
⚙️ Heavy Equipment
Finance machinery and equipment with 10+ year useful life.
🔧 Major Renovations
Modernize or expand existing facilities including soft costs.
🏗️ New Construction
Ground-up construction including land acquisition.
Eligibility Requirements
- Owner Occupancy: 51%+ for existing buildings, 60%+ for new construction
- For-Profit Business: Operating in the United States
- Net Worth: Tangible net worth under $15 million
- Net Income: Less than $5M average for prior 2 years
- Job Creation: 1 job per $75K of CDC funding (or community goals)
What's NOT Eligible
- Investment or rental properties (must be owner-occupied)
- Working capital or inventory
- Debt refinancing (limited exceptions)
- Speculative real estate
SBA 504 At a Glance
- Loan Amount
- Up to $12M+
- Down Payment
- 10% (sometimes 15%)
- CDC Portion
- Fixed 20-25 yrs
- Bank Portion
- Variable, 10-15 yrs
- Timeline
- 60-90 days
- Collateral
- Asset financed
Ideal Candidate
- ✓ 2+ years in business
- ✓ 680+ credit score
- ✓ 10% equity available
- ✓ Owner-occupying property
- ✓ Positive cash flow
504 vs. Other Financing
| Feature | SBA 504 | Conventional | SBA 7(a) |
|---|---|---|---|
|
Down Payment
|
10%
|
20-30%
|
10-15%
|
|
Rate Type
|
Fixed 25 yrs
|
5-7 yr reset
|
Variable
|
|
Max Amount
|
$12M+ (project)
|
Varies
|
$5M
|
|
Includes Goodwill
|
No
|
No
|
Yes
|
|
Best For
|
Real estate & equipment
|
Strong borrowers
|
Acquisitions
|
| Feature | SBA 504 | Conventional | SBA 7(a) |
|---|---|---|---|
|
Down Payment
|
10%
|
20-30%
|
10-15%
|
|
Rate Type
|
Fixed 25 yrs
|
5-7 yr reset
|
Variable
|
|
Max Amount
|
$12M+ (project)
|
Varies
|
$5M
|
|
Includes Goodwill
|
No
|
No
|
Yes
|
|
Best For
|
Real estate & equipment
|
Strong borrowers
|
Acquisitions
|
The 504 Process
1
Pre-Qualification
We assess eligibility and match you with partners.
2
Application
Complete application with bank and CDC.
3
Underwriting
Parallel review and SBA authorization.
4
Closing
Close with bank first, CDC funding follows.
SBA 504 FAQs
Can I lease out part of the building?
Yes, up to 49% of existing buildings (40% for new construction) can be leased to other tenants.
What if I need working capital too?
504 is only for fixed assets. We can structure an SBA 7(a) or line of credit alongside your 504.
Is there a prepayment penalty?
The CDC portion has a declining penalty (10% year 1, declining 1%/year). Bank terms vary.
Can I use 504 for a franchise?
Yes, if the franchise involves purchasing real estate or major equipment. Many franchisees use 504.