SBA 504 loans offer the lowest down payment and longest fixed-rate terms available for owner-occupied commercial real estate. Below-market rates, 25-year amortization, and government-backed stability.

Check SBA Eligibility →How 504 Works ↓

10%

Down Payment

25 yr

Fixed Rate Term

6.0–7.5%

Rate Range

$5M+

Max Loan Amount

HOW SBA 504 WORKS

The Three-Party Financing Structure

SBA 504 loans use a unique structure that splits the financing between three parties. This is what makes the 10% down payment possible — and keeps your monthly payments lower than any conventional alternative.

10%

Borrower Equity

Your down payment. The lowest equity requirement for any commercial mortgage program.

40%

CDC / SBA Loan

Fixed-rate, 25-year debenture backed by the SBA. This is the below-market-rate portion.

50%

Bank First Mortgage

Conventional first-position loan from an SBA-approved lender. Typically 10–20 year term.

Lowest Down Payment in CRE

10% equity vs. 20–35% for conventional CRE loans. Preserves working capital for operations and growth.

25-Year Fixed Rate

The CDC/SBA portion carries a fully fixed rate for 25 years. No balloon payments, no rate resets, no surprises.

Below-Market Pricing

SBA debenture rates are pegged to Treasury yields plus a fixed spread, consistently pricing below conventional bank rates.

No Balloon Payment

Fully amortizing 25-year term eliminates the refinancing risk that comes with 5–10 year balloon structures.

Job Creation Incentive

SBA tracks job creation per loan dollar, but the requirement is flexible — most qualifying businesses meet it naturally.

Up to $5.5M SBA Portion

Standard 504 limit is $5M for the SBA/CDC portion. Manufacturing businesses may qualify for $5.5M. Total project cost can exceed $10M.

CURRENT RATES & TERMS

SBA 504 vs. Conventional CRE Loans

See how SBA 504 compares to conventional bank financing on the metrics that matter most to CRE borrowers.

SBA 504

Conventional

Down Payment

10%

20 – 35%

Interest Rate (CDC)

6.0 – 7.0% fixed

6.5 – 9.0%

Term Length

25 years (CDC)

5 – 10 years

Amortization

25 years, fully amortizing

20 – 25 years

Balloon Payment

None

Yes (at term end)

Max Loan (SBA)

$5M – $5.5M

No SBA limit

Occupancy Req.

51%+ owner-occupied

None

Prepayment Penalty

Declining over 10 years

Varies

Personal Guarantee

Required (20%+ owners)

Required

Best For

Owner-occupants, long hold

Investors, flexible use

QUALIFICATION REQUIREMENTS

Who Qualifies for SBA 504?

SBA 504 is designed for established businesses purchasing or improving owner-occupied commercial real estate. Requirements are more accessible than most borrowers expect.

51%+

Owner Occupancy

Your business must occupy at least 51% of the property. For new construction, 60% occupancy is required within one year.

680+

Credit Score

Most SBA-approved lenders require 680+ FICO. Some CDC partners may work with 660+ for strong business profiles.

2+ years

Time in Business

Established operating history with demonstrated revenue. Startups with strong management experience may qualify case-by-case.

1.25x+

Debt Service Coverage

Global DSCR including all business debts. Lenders want to see your business can comfortably service the new loan.

$15M max

Net Worth Limit

Tangible net worth under $15M and average net income under $5M for the prior two years. Most small businesses qualify.

All major types

Eligible Properties

Office, retail, warehouse, industrial, medical, restaurant, hotel, mixed-use, and special purpose. Must be owner-occupied.

FREQUENTLY ASKED QUESTIONS

SBA 504 Loan FAQ

What can SBA 504 funds be used for?

SBA 504 covers the purchase of existing buildings, land, new construction, major renovations, and heavy equipment with a 10+ year useful life. It cannot be used for working capital, inventory, or debt consolidation unrelated to the project.

How long does SBA 504 approval take?

Typical timeline is 45–90 days from complete application to closing. The CDC processes its portion in parallel with the bank’s first mortgage underwriting. Having documents ready upfront can significantly accelerate the timeline.

Can I refinance into an SBA 504?

Yes. The SBA 504 Refinance Program allows eligible owner-occupants to refinance existing commercial real estate debt into the 504 structure, accessing the same 10% equity and fixed-rate benefits.

What is the difference between SBA 504 and 7(a)?

SBA 504 is specifically for fixed-asset purchases (real estate and major equipment) and offers lower down payments with longer fixed-rate terms. SBA 7(a) is more flexible and can cover working capital, but typically has variable rates and shorter terms. For CRE purchases, 504 almost always offers better economics.

Is there a prepayment penalty?

The CDC/SBA portion has a declining prepayment penalty during the first 10 years, starting at approximately 5% and declining to zero. The bank first mortgage prepayment terms are negotiated separately.

What does the 10/50/40 structure mean for my monthly payment?

The blended payment is typically 15–25% lower than a conventional mortgage because the CDC/SBA portion carries a below-market fixed rate and 25-year amortization. Use our SBA 504 Calculator to model your specific scenario.

Ready to Buy Your Building with 10% Down?

Our SBA specialists identify the right CDC partner and bank lender for your property. Pre-assessment is free and takes 48 hours.

Check SBA 504 Eligibility →

Our 6 commitments to every borrower

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Every commitment below exists because real borrowers got burned without it. We built BestLoanUSA to be the lender we wished existed.

Hidden Fees

No surprise charges at closing. Every cost disclosed upfront in writing before you commit.

24hr

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Know where you stand within one business day — not weeks or months of silence.

Dedicated Advisor

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Day 1

Complete Checklist

Full document requirements on your first call. No mid-process surprises asking for "one more thing."

100%

Upfront Pricing

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5 min

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Why borrowers switch to us

Five things your last lender should have done.

Borrowers don't come to us because lending is complicated. They come because someone else made it harder than it needed to be.

1
48 hours to clarity. You'll know exactly where you stand — not wonder for months.
2
Every dollar in writing. The rate and fees you see on day one are the ones you sign at closing.
3
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4
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5
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“I’ve spent over a decade watching good borrowers lose money to a broken process. BestLoanUSA exists so that stops happening.”

Jason Kim

Managing Director, Commercial Lending

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Buy Your Commercial Property with Just 10% Down