SBA 504 Loans for Commercial Real Estate
Low down payments and below-market fixed rates—government-backed financing for owner-occupied commercial property.
The Best-Kept Secret in Commercial Real Estate Financing
For business owners purchasing or refinancing owner-occupied commercial property, the SBA 504 loan program offers terms that are difficult to match: down payments as low as 10%, below-market fixed interest rates, and terms up to 25 years.
Despite these advantages, many business owners don't know the program exists—or assume they won't qualify. In reality, the SBA 504 program serves a wide range of small and mid-sized businesses across virtually every industry.
Brookmont Capital Ventures helps business owners navigate SBA 504 financing, structuring loans that minimize down payment and maximize long-term value.
SBA 504 Loan Benefits
Low Down Payment
Put as little as 10% down on your commercial property purchase—compared to 20-30% required by conventional lenders. Preserve working capital for operations and growth.
Below-Market Fixed Rates
The SBA-backed portion of your loan carries a fixed rate tied to Treasury rates, typically well below conventional commercial mortgage rates. Lock in predictable payments for the life of the loan.
Long Loan Terms
Terms of 10, 20, or 25 years with full amortization—no balloon payments. Your monthly payment stays consistent, making budgeting easier.
Cash-Out Refinancing
Refinance existing commercial real estate debt and extract up to 20% of property value as working capital for business needs.
Build Wealth Through Ownership
Stop paying rent to a landlord. Build equity in an appreciating asset while controlling your business location.
How the SBA 504 Structure Works
SBA 504 loans combine financing from three sources:
| Source | Portion | Terms |
|---|---|---|
| Conventional Lender | 50% | Market rate, typically 10-year term |
| CDC (SBA-backed) | 40% | Fixed rate, 10/20/25-year term |
| Borrower Equity | 10% | Down payment |
Example: $2,000,000 Property Purchase
- Bank loan (50%): $1,000,000
- CDC/SBA loan (40%): $800,000
- Borrower down payment (10%): $200,000
The SBA doesn't lend directly—instead, it guarantees the CDC (Certified Development Company) portion, allowing for favorable terms.
Eligibility Requirements
Business Qualifications
- For-profit business operating in the United States
- Net worth under $15 million
- Average net income under $5 million (after taxes, for prior two years)
- Meet SBA size standards for your industry
Property Requirements
- Owner-occupied: At least 51% for existing buildings, 60% for new construction
- Located in the United States
- Used for business operations (not investment/rental)
Use of Funds
- Purchase land and existing buildings
- Construct new facilities
- Renovate or modernize existing property
- Purchase long-term machinery and equipment
- Refinance existing eligible debt
Property Types
SBA 504 loans can finance most owner-occupied commercial properties:
- Office Buildings – Professional services, corporate headquarters
- Medical Facilities – Clinics, dental offices, veterinary practices
- Retail Locations – Restaurants, stores, service businesses
- Industrial/Warehouse – Manufacturing, distribution, storage
- Hospitality – Hotels and motels (special use properties)
- Mixed-Use – Buildings with commercial and residential components
- Special Purpose – Car washes, daycare centers, funeral homes, and more
SBA 504 vs. Conventional Financing
| Factor | SBA 504 | Conventional |
|---|---|---|
| Down Payment | 10% (sometimes 15%) | 20-30% |
| Interest Rate | Below market (fixed CDC portion) | Market rate |
| Term | Up to 25 years | 5-10 years typical |
| Amortization | Fully amortizing | Often balloon payment |
| Cash-Out | Up to 20% for working capital | Limited |
| Prepayment | Penalty on CDC portion (declining) | Varies |
| Closing Time | 60-90 days | 30-60 days |
The trade-off: SBA 504 loans take longer to close and involve more paperwork, but the long-term savings often far outweigh the upfront effort.
SBA 504 Refinancing
Already own your commercial property? SBA 504 refinancing allows you to:
- Lower your interest rate by refinancing existing debt
- Extract working capital (up to 20% of property value)
- Extend your term and reduce monthly payments
- Consolidate multiple loans into one fixed-rate payment
Requirements for refinance:
- Existing debt must be at least 6 months old
- Loan must have been current for at least 12 months
- 85% maximum loan-to-value for cash-out refinances
The SBA 504 Process
Pre-Qualification
We evaluate your business financials and property to confirm SBA eligibility and estimate loan terms.
Lender and CDC Selection
We connect you with conventional lenders and Certified Development Companies experienced in SBA 504 loans.
Application
Submit business financials, tax returns, and property information. We help prepare a complete package to minimize delays.
Underwriting
Both the conventional lender and CDC underwrite the loan. We coordinate between parties to keep the process moving.
SBA Approval
The CDC submits the loan to SBA for final approval—typically a formality if underwriting is solid.
Closing
Close on your property with only 10% down and begin building equity in your business real estate.
Timeline: Expect 60-90 days from application to closing for straightforward deals.
Who Should Consider SBA 504
The SBA 504 program is ideal for:
- Growing businesses that need to purchase or expand facilities
- Business owners currently renting who want to build equity
- Companies with limited capital that can't afford 20-30% down
- Owners seeking rate certainty with long-term fixed rates
- Businesses refinancing expensive existing debt
Why Work With Brookmont
SBA Expertise – We understand SBA 504 requirements and help you navigate the process efficiently—avoiding common pitfalls that delay closings.
Lender Relationships – We work with banks and CDCs experienced in SBA lending, ensuring you get responsive service and competitive terms.
Full-Service Advisory – Beyond SBA, we can help with conventional financing, bridge loans, or other capital needs as your business grows.
Business Owner Focus – We work with owner-operators, not just investors. We understand the unique needs of businesses acquiring their own facilities.
Ready to Explore SBA 504 Financing?
If you're a business owner looking to purchase, build, or refinance commercial property, SBA 504 may offer the most attractive terms available. Brookmont Capital Ventures can help you determine eligibility and guide you through the process.
Questions? Contact our team at info@brookmontcapital.net
Brookmont Capital Ventures is a capital advisory firm. We do not provide direct lending services. All financing is subject to lender and SBA approval.