About the SBA 504 loan


The SBA 504 loan is a partnership between an SBA Certified Development Company (CDC) and a bank. The loan provides financing for the purchase, renovation, or construction of commercial real estate. Some advantages include:

  • Up to 90% financing to preserve working capital
  • Long-term amortization for low monthly payments
  • Below-market 20-year fixed interest rate
  • Fixed or adjustable rates available on the First Mortgage
  • Purchasing commercial real estate with long-term, below-market fixed rates can be more cost effective than leasing
  • Title to the building can be taken by the business, the principals individually, a holding company, or a trust




SBA interest rates graph
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Sample structure

Project Cost Typical Structure
First Mortgage (Bank) $6,250,000 50%
Second Mortgage (Capital Access Group) $5,000,000 40%
Down Payment (Borrower) $1,250,000 10%
Total $12,500,000  

Based on a typical 50-40-10 structure and a Total Project Cost of $12.5M.

Quick facts

First Mortgage
Second Mortgage
(Capital Access Group)
Down Payment
Typical Structure 50% 40% 10%
Maximum Amounts No maximum, up to 65% LTV $5–5,500,0001 10%2
Rate Fixed or Adjustable Below-Market 20-Year Fixed  
Term 10 Year Minimum 20 Years  
Amortization 20-30 Years Fully Amortized  
Prepayment Penalty or No Penalty Available No penalty after 10 years3  
Fees Points Vary (Approx. 1%) 2.65% Financed into Loan  

1$5M for most projects, $5.5M for manufacturers or energy-saving facilities. 2New Business (less than two years old) OR Special-Purpose Building require 15% equity. New Business AND Special-Purpose Building requires 20%. 3 Penalty is a declining percentage of the balance for the first 10 years.