SBA 504 — Fixed-rate real estate financing
SBA 504 Loans — long-term fixed rate.
Built for owner-occupied commercial real estate and major fixed assets. Borrowers typically contribute 10%, with a long-term fixed rate on the SBA portion. Up to $5.5M debenture per project — larger total project sizes supported through the bank + CDC structure.
Why Choose SBA 504?
The best way to finance commercial real estate with below-market fixed rates
- 10% down on real estate
- Borrowers typically contribute 10% versus 20–30% for conventional commercial financing — preserving working capital for operations.
- 25-year fixed rate on the SBA portion
- The 504 second-mortgage debenture funds at a long-term fixed rate. No surprises across changing rate environments.
- Owner-occupied real estate and heavy equipment
- Designed for projects where the business will occupy at least 51% of the property, or for equipment with a 10+ year useful life.
- Blended structure: bank + CDC + borrower
- Typically 50% conventional first mortgage from a bank, 40% from the SBA via a Certified Development Company, 10% borrower equity.
- Refinance eligibility
- 504 refinance rules allow refinancing of qualifying existing commercial real estate debt, up to 90% LTV in eligible scenarios.
- No balloon, no call provisions
- Fully amortized over the loan term. Predictable monthly payments for the life of the loan.
How 504 Financing Works
A unique three-part financing structure that maximizes your buying power
Bank Loan
Senior lender provides half of project financing at market rates
SBA Debenture
CDC provides SBA portion at below-market fixed rates
Your Investment
Minimal down payment preserves working capital
Pro Tip: Stack Your Savings
The 40% SBA debenture portion is a long-term fixed rate funded through CDC-issued debentures. Use our calculator to model the blended rate on your specific project — try a 50/40/10 split with live rates to see real numbers for your scenario.
Do You Qualify?
SBA 504 loans have specific requirements to ensure the program supports job creation
Business Requirements
- For-profit business operating in the U.S.
- Tangible net worth less than $15 million
- Average net income less than $5 million (after taxes)
- Owner-occupy at least 51% of the property
- Create or retain 1 job per $75,000 of SBA loan
Eligible Uses
- Purchase land and existing buildings
- Construction of new facilities
- Renovation and modernization
- Purchase of machinery and equipment
- Refinance debt on fixed assets
Not Eligible For 504 Loans:
Working capital, inventory, consolidating or paying off debt (except qualifying refinances), investment real estate, or businesses primarily engaged in speculation.
Your Path to Property Ownership
From application to keys in hand in 60-90 days
Pre-Qualification
Review eligibility and project feasibility
1-3 days
Application Package
Complete forms and gather documents
1-2 weeks
Credit Approval
Bank and SBA underwriting process
4-6 weeks
Closing & Funding
Sign documents and receive funds
2-3 weeks
Where SBA 504 Shines
The 504 program is purpose-built for owner-occupied commercial real estate and major fixed-asset purchases.
Owner-occupied real estate
10% down
Preserve working capital for operations and growth.
Borrowers typically contribute 10% versus 20–30% for conventional commercial financing.
Long-term fixed rate
25-year fixed
Predictable occupancy costs through changing rate environments.
The 504 second-mortgage debenture locks in a fixed rate for the life of the loan.
Refinancing existing debt
Up to 90% LTV
Useful for stabilizing payments or accessing equity for eligible business expenses.
504 refi rules allow refinancing of qualifying existing commercial real estate debt.
Source: SBA 504 program guidelines (sba.gov).
Frequently Asked Questions
What's the minimum down payment for a 504 loan?
Typically 10% for real estate purchases. For special purpose properties or startups, 15% may be required.
Can I refinance existing debt with a 504 loan?
Yes, you can refinance debt on eligible fixed assets if it's been in place for at least 2 years and you can show 10% equity improvement.
How long does the 504 process take?
From application to funding typically takes 60-90 days, depending on project complexity and how quickly documents are provided.
What are the job creation requirements?
Create or retain 1 job for every $75,000 of SBA debenture, or meet community development or public policy goals.
Can I lease part of my building?
Yes, but you must occupy at least 51% immediately and plan to occupy 60% within 10 years.
Ready to Own Your Building?
Stop paying rent. Build equity. Secure your future with SBA 504 financing.