Your SBA 504 Loan Guide

The U.S. Small Business Administration (SBA) created the 504 loan program in 1980 to provide accessible financing for growing businesses seeking owner-occupied commercial real estate.

As little as 10% down payment to preserve working capital

No additional collateral required

Decreased risk for lenders

No limit on total project costs

Below-market FIXED rates, 20 year and 10 year terms

Maximums on SBA Loan Portions

  • $5.0 million for most projects
  • $5.5 million for manufacturing projects
  • $5.5 million when "Go Green" initiatives are met
  • No maximum limit placed on total project cost or lender's first mortgage

How Funds May Be Used

  • Acquisition of an existing building (51% occupancy)
  • Building expansion or renovations
  • Equipment
  • Fixed assets from business acquisition
  • Land and new construction

Borrower Contribution

  • As little as 10% down payment for most loans
  • 15% for start-up businesses (within two years) or special-use properties
  • 20% if project is a start-up and a special-use property

Program Goals

  • Job creation
  • Expansion of lending to women, minorities and veterans
  • Assisting U.S. manufacturing
  • Rural and under-served area development
  • Expansion of lending to businesses that "Go Green"

Go Green Qualifications

  • LEED certified buildings
  • Projects that reduce energy consumption by at least 10%
  • Projects that generate renewable energy
  • Qualify for purchase of multiple properties (no cap)
  • Unlimited total project cost (SBA portion capped at $5.5 million)


  • Private, for-profit businesses in the U.S.
  • Seeking financing for equipment or an owner-occupied building (minimum 51%)

How is an SBA 504 loan structured?

Using the example of a $4 million purchase with improvements of an additional $1 million, the financing for a project totalling $5 million would look like this:


Did You Know?

  • Most privately held companies are eligible for SBA financing.
  • SBA 504 Program provides up to 90% financing that helps owners preserve working capital.
  • SBA 504 provides special savings for U.S. Veteran-owned businesses.
  • An unlimited number of SBA 504 loans are available, even if 504 or 7A borrowing limits were already met (when businesses "go green").

Why choose an SBA 504 over a 7A or Conventional loan?

Project Size

Down Payment


Interest Rate


Prepayment Penalty


No Maximum

10% Minimum

Included in SBA Loan Amount at approximately 2.65%

SBA 2nd Loan at Below-Market, Fixed-Rates for 20 Years

No Additional Collateral Required

Yes - 10 years, declining each year


Maximum Loan Amount $5MM

10 - 15% Minimum

Paid out of pocket at 2% to 3.75% of the Loan Amount

Typically Variable Rate Tied to Prime

Additional Collateral Typically Required for 90% Financing

Yes - Typically 3 years


No Maximum

25 - 40%

Paid out of pocket at approximatly 1%

Varies by Lender

Typically No Additional Collateral

Varies by Lender