The SBA 504 loan is built for one thing: helping a growing business own major fixed assets — a building, a build-out, or expensive long-life equipment — without draining cash or taking a short, expensive loan. It pairs a conventional bank loan with a low, long-term fixed-rate loan from a Certified Development Company (CDC).
How the 504 structure works
- ~50% from a bank — a first-mortgage loan at the lender's rate.
- ~40% from a CDC — backed by the SBA, at a long-term fixed rate.
- ~10% from you — your down payment (15–20% for startups or special-use property).
Why owners love it: half your loan is locked at a fixed rate for 20–25 years, so your biggest payment never balloons — even if rates climb.
What 504 loans fund
- Buying, building, or renovating owner-occupied commercial real estate.
- Heavy or long-life equipment and machinery.
- Site improvements, and some soft costs rolled into the project.
Need working capital, inventory, or a revolving credit line instead? Look at an SBA 7(a) loan, a business line of credit, or working capital.
Typical guidelines
| Requirement | Typical minimum |
|---|---|
| Time in business | 2+ years (startups possible with more down) |
| Credit score | 680+ preferred |
| Down payment | 10% (15–20% startup / special-use) |
| Occupancy | 51%+ owner-occupied real estate |
Frequently asked questions
What can a 504 loan be used for?
Major fixed assets — commercial real estate and large equipment. Not working capital or inventory.
How much down?
As little as 10%; 15–20% for startups or special-purpose buildings.
How are 504 rates set?
The CDC half is a long-term fixed rate tied to 10-year Treasuries; the bank half is set by the lender. Blended, it's one of the lowest-cost options available.