SBA 504 loans
The SBA 504 program is built for businesses buying, building or improving the property they operate from, or buying long-life equipment. Many projects need as little as 10% down.
At a glance
| Typical structure | About 50% first-lien bank loan, up to 40% from a Certified Development Company (CDC) backed by the SBA, and about 10% from the borrower |
|---|---|
| Borrower contribution | Usually 10%; 15% to 20% for start-ups or special-purpose property |
| CDC portion limit | Generally $5 million; higher for certain manufacturing and energy projects |
| Uses | Buying or building owner-occupied real estate, major renovations, long-life machinery and equipment, eligible refinancing |
| Occupancy | Your business must occupy at least 51% of an existing building (60% for new construction) |
| Who decides | 504 loans involve a participating lender and an SBA-approved CDC. Eligibility is set by SBA rules |
When 504 beats 7(a)
- The project is mostly real estate or heavy equipment, not goodwill or working capital
- You want a long fixed-rate term on a large portion of the project
- You want to keep more cash in the business by putting less down
Job and public-policy goals
504 projects generally need to meet a job creation or retention goal, or a public-policy goal such as energy efficiency, rural development, or manufacturing. We'll help you document which applies.
No rates are quoted on this site. Terms depend on the property or business, documentation option, experience and market conditions. We'll give you real numbers after reviewing your application.
Questions about SBA 504 loans
How much down payment does an SBA 504 loan require?
Usually 10% of the project cost. Start-ups and special-purpose properties (such as hotels or car washes) generally need 15% to 20%.
What is a CDC?
A Certified Development Company is a nonprofit approved by the SBA to provide the 504 second-position loan. It works alongside the first-lien lender.
Can I use 504 for an investment building?
No. Your business must occupy at least 51% of an existing building. For investment property, look at conventional commercial or DSCR financing.
Can I refinance with SBA 504?
Yes, eligible owner-occupied commercial real estate debt can be refinanced under 504, subject to SBA rules.
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