What Is a SBA 504 Loan?
The SBA 504 loan program provides long-term, fixed-rate financing for major fixed assets — primarily commercial real estate and heavy equipment. The loan has a unique structure: 50% from a bank, 40% from a CDC backed by the SBA, and 10% is your down payment.
SBA 504 Loan Rates & Terms
The CDC portion (40%) offers fixed rates pegged to Treasury bonds, typically 5.5% to 7%. Terms are 10, 20, or 25 years. The bank portion (50%) has rates typically 6% to 8%. Total loan amounts can reach $5 million.
How Does a SBA 504 Loan Work?
You work with both a bank and a CDC. The bank provides 50% in a conventional loan. The CDC provides 40% through an SBA-guaranteed debenture. You contribute 10% as down payment.
Key Features of Our SBA 504 Loan
Dual-Tier Breakdown
Separate CDC (40%) and Bank (50%) loan calculations
10% Down
See how SBA 504 requires only 10% down
✅ Pros
- Only 10% down payment required
- Below-market fixed rates on CDC portion
- Long terms (20-25 years)
- No balloon on CDC portion
⚠️ Cons
- Longer, more complex approval process
- Prepayment penalties on CDC portion
- Must meet SBA eligibility requirements
SBA 504 Loan vs Alternatives
SBA 504 Loan vs SBA 7(a) Loan
SBA 7(a) is more flexible but has higher rates and shorter terms. 504 offers better terms for real estate specifically.
SBA 504 Loan vs Conventional Commercial Mortgage
Conventional requires 25-30% down with shorter terms. SBA 504 requires only 10% down with 20-25 year fixed-rate terms.
How to Qualify for a SBA 504 Loan
Must be a for-profit small business, occupy at least 51% of the property (60% for new construction), demonstrate repayment ability, good credit (680+).