How the 504 structure works
| Piece | Share of project | Who provides it |
|---|---|---|
| First mortgage | About 50% | A bank or credit union |
| Second mortgage | Up to 40% | A Certified Development Company, backed by the SBA |
| Down payment | As little as 10% | You (more for startups or special-purpose property) |
The CDC portion carries a long-term fixed rate, which protects you from rising rates on most of the project.
What 504 can finance
- Buying an existing building your business will occupy
- Ground-up construction or major renovation
- Long-life machinery and equipment
- Refinancing eligible owner-occupied real estate debt
Who qualifies
For-profit businesses within SBA size standards that will occupy at least 51% of an existing building, or 60% of a new one. Investment and rental real estate don't qualify.
What SBA lenders will ask for
- Three years of business tax returns, plus year-to-date financials
- Three years of personal tax returns for each owner of 20% or more
- Personal financial statement for each owner (SBA Form 413)
- Business debt schedule
- Purchase contract or project details, and resumes of the owners
Need working capital or goodwill in the same loan? Compare with the SBA 7(a) loan.
Terms shown are typical market ranges across our lender network, not a commitment. Your actual terms come in writing after we review your deal.
Recent closings
Solved: A tenant bought the building he leased, despite trouble documenting all of his sales income.
Frequently asked questions
How much do I need down for an SBA 504 loan?
Typically 10%. Startups or special-purpose properties (such as hotels or gas stations) often need 15%, and 20% if both apply.
What's the maximum SBA 504 loan?
The SBA-backed CDC portion is generally capped at $5 million, or $5.5 million for qualifying manufacturing and energy projects. The bank portion has no SBA cap, so total projects can be much larger.
Can I lease out part of the building?
Yes. With an existing building you must occupy at least 51% and can lease the rest. For new construction, you must occupy 60%.
Is SBA 504 better than a conventional loan?
For owner-occupied buyers, often yes: a lower down payment and a long fixed rate on the CDC piece. A conventional loan can be simpler and faster for buyers with more cash. We'll compare both.