SBA 504 Loans
SBA 504 loans are designed specifically for purchasing owner-occupied commercial real estate and long-life equipment. With 20–25 year fixed rates and as little as 10% down, 504 loans deliver the lowest effective cost of capital for expanding businesses that own their own facilities.
About SBA 504 Loans
The SBA 504 loan program is a government-backed financing structure specifically for acquiring fixed assets — most commonly commercial real estate or heavy machinery. A 504 project combines three financing sources: 50% from a bank (first mortgage), 40% from a Certified Development Company (CDC) at below-market fixed rates, and just 10% from the borrower. This structure gives small businesses access to Wall Street-style financing with built-in equity protection.
Key Features & Benefits
Everything you need to know about what makes SBA 504 financing a smart choice.
10% Down Payment
Preserve up to 40% more working capital versus conventional commercial mortgages, which typically require 25–30% down.
Below-Market Fixed Rates
The SBA portion locks in at below-market rates tied to 10-year Treasury bonds — protection against future rate increases.
25-Year Amortization
Long amortization schedules lower monthly payments and improve cash flow coverage ratios.
Real Estate & Equipment Only
Designed specifically for fixed assets: owner-occupied buildings, equipment with 10+ year useful life, and renovations.
No Balloon Payment
Fully amortizing — no refinance risk at term end, unlike many commercial mortgage structures.
Supports Job Creation
Public policy goals of the program mean strong incentives for businesses expanding their workforce or serving underserved areas.
Who Uses SBA 504 Financing
- Purchasing an owner-occupied commercial building
- Ground-up construction of a new headquarters or facility
- Renovation or expansion of existing owned property
- Purchasing large machinery with 10+ year useful life
- Acquiring land for business expansion
- Refinancing an existing commercial mortgage (if eligible)
Qualifications & Eligibility
- For-profit business that will occupy at least 51% of the property
- Net worth under $15 million and average net income under $5 million
- Primary use for approved fixed assets only (no working capital)
- Owner(s) with 20%+ equity must personally guarantee
- Business must meet SBA size standards
- Creation or retention of 1 job per $75,000 of SBA funding (or community development goal)
How It Works
Our streamlined process gets you from application to funding quickly.
Eligibility Review
We confirm the property is owner-occupied and project fits 504 guidelines.
Bank Loan Commitment
We line up the 50% first mortgage from our bank partners.
CDC Application
Certified Development Company processes the 40% SBA portion.
SBA Approval
SBA reviews and approves the debenture guarantee.
Closing
Coordinate simultaneous closings — bank loan funds, then the CDC/SBA debenture is sold to investors.
Why Choose Growth Fund Partners for SBA 504
Frequently Asked Questions
Common questions about SBA 504 loans answered.
What is the difference between SBA 7(a) and 504?
SBA 7(a) is more flexible (can fund working capital, acquisitions, equipment) with variable rates. SBA 504 is restricted to real estate and major equipment but offers lower fixed rates and 10% down.
Can I refinance an existing mortgage with a 504 loan?
Yes — the SBA 504 Refinance Program allows refinancing of qualifying commercial mortgages originated 6+ months prior, provided substantial equity exists.
What is the 51% owner-occupancy rule?
Your business must occupy at least 51% of the property for existing buildings, or 60% immediately (with 80% within 10 years) for new construction.
Does a 504 loan have prepayment penalties?
Yes, the SBA debenture portion has a declining prepayment penalty during the first half of the term. The bank portion terms vary by lender.
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