SBA 504 Loans
Finance commercial real estate and major equipment purchases with SBA 504 loans. Low down payments, competitive rates, and government guarantees up to $5.5 million.
What is an SBA 504 Loan?
The SBA 504 loan program is designed to help small businesses acquire major fixed assets for expansion or modernization. It's a partnership between a private lender, a Certified Development Company (CDC), and the SBA.
The loan structure typically includes 50% from a private lender, 40% from the SBA (through a CDC), and 10% down payment from the borrower. This structure allows for lower down payments and competitive rates.
Key Benefits
What Can You Use SBA 504 Loans For?
Commercial Real Estate
Purchase or construct owner-occupied commercial buildings and facilities
Major Equipment
Purchase machinery, equipment, and other long-term assets
Land & Improvements
Purchase land and make improvements like parking lots and utilities
Refinancing
Refinance existing debt for expansion or modernization projects
Business Expansion
Expand existing facilities or add new locations
Modernization
Upgrade facilities and equipment to improve efficiency
How SBA 504 Loans Work
Three-Party Structure
The loan involves three parties: a private lender (50%), a CDC (40%), and the borrower (10%).
Private Lender Portion
A bank or credit union provides 50% of the financing with conventional terms and rates.
CDC Portion
A Certified Development Company provides 40% with SBA backing and favorable terms.
Borrower Investment
The business owner provides 10% down payment, significantly lower than conventional loans.
Loan Structure
SBA 504 Loan Terms
Loan Amounts
Up to $5.5 million per project, $16.5 million total for multiple projects
Interest Rates
Fixed rates, typically below market rates for conventional commercial loans
Terms
10 years for equipment, 20-25 years for real estate
Down Payment
Only 10% down payment required from the borrower
SBA 504 Requirements
Business Size
Must meet SBA size standards for your industry
Owner-Occupied
Property must be at least 51% owner-occupied
Job Creation
Must create or retain jobs (1 job per $65K borrowed)
Net Worth
Business net worth under $15 million
SBA 504 Loan Requirements
SBA 504 loans have specific requirements that businesses must meet to qualify. The program is designed for small businesses that need to acquire major fixed assets for expansion or modernization.
Unlike SBA 7(a) loans, 504 loans are specifically for real estate and equipment purchases, and the property must be owner-occupied. The program also has job creation requirements to support economic development.
Ready to Apply for an SBA 504 Loan?
Get the financing you need for commercial real estate and major equipment purchases. Connect with SBA 504 lenders today.