SBA 504 Loans – For Owner Occupied Commercial Real Estate

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SBA 504 Loans – Helping small business owners purchase real estate and large equipment

Click here to download the guide “What is the SBA 504 Program?

An SBA 504 is a long-term, fixed-rate solution The U.S. Small Business Administration established the 504 loan to help businesses purchase owner-occupied commercial real estate and equipment while retaining working capital.

The SBA 504 loan puts financing within reach for small businesses through low down payments and long-term, low, fixed interest rates. It also reduces the risk to lenders through a shared financing structure.


Loan Amounts

Maximum loan amounts are determined by how funds will be used based on which goal they support from the list below:

  • Job Creation – The maximum SBA debentures is $5 million for meeting the job creation criteria or a community development goal. Generally, your business must create or retain one job for every $65,000 provided by the SBA, except for small manufacturers, which have a $100,000 job creation or retention goal (see below).
  • Public Policy – The maximum SBA debentures is $5 million or $5.5 for small manufacturing or when meeting the public policy goals of energy reduction or alternative fuels. Examples of public policy goals include:
    • Business district revitalization
    • Expansion of exports
    • Expansion of minority business development
    • Rural development
    • Increasing productivity and competitiveness
    • Restructuring because of federally mandated standards or policies
    • Changes necessitated by federal budget cutbacks
    • Expansion of small business concerns owned and controlled by veterans (especially service-disabled veterans)
    • Expansion of small business concerns owned and controlled by women
  • Small Manufacturing – The maximum debentures for small manufacturers is $5.5 million. A small manufacturer is defined as a business with its primary business classified in sector 31, 32, or 33 of the North American Industrial Classification System (NAICS), and all of its production facilities located in the United States. To qualify for a $5.5 million 504 loan, your business must meet the definition of a small manufacturer and accomplish one of the following:
    • Create or retain 1 job opportunity per $100,000 guaranteed by the SBA [Section 501(d)(1) of the Small Business Investment Act (SBI Act)]
    • Achieve one of the community development or public policy goals [sections 501(d)(2) or (3) of the SBI Act]


Generally, the project assets being financed are used as collateral. Personal guarantees of the principal owners are also required.

Maturity Terms

Maturity terms of 10, 20 and 25 years are available.

Interest Rates

Interest rates on 504 loans are pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issues.


Fees total approximately 3 percent of the debentures and may be financed with the loan.

Click here to download the guide “What is the SBA 504 Program?

If your small business is looking to purchase real estate for your business or large equipment, this is the loan program to look at. With low down payments you can stop paying rent and purchase a long-term asset.