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Total cost of real estate or equipment purchase
Please enter the total project cost
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Minimum 10% for most SBA 504 loans
Minimum 10% down payment required
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Rate on the 50% bank portion (negotiated)
Please enter the bank loan rate
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Fixed CDC portion rate — pre-filled with 2025 estimate
Please enter the SBA rate
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💰 Your Down Payment (10%)—
🏦 Bank Loan (50%)—
🏛️ SBA/CDC Loan (40%)—
📊 Total Project Cost—
Full Payment Breakdown
| Loan Portion | Amount | Rate | Term | Monthly Payment | Total Interest |
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How the SBA 504 Loan Structure Works
The SBA 504 loan program uses a unique three-party structure that keeps your down payment low while providing long-term, fixed-rate financing for major business assets.
The 504 Loan Split
| Party | Portion | Type | Typical Rate | Term |
|---|---|---|---|---|
| You (Borrower) | 10% | Down payment | — | — |
| Bank / Lender | 50% | First mortgage | Variable or fixed | 10–25 years |
| SBA / CDC | 40% | Second mortgage | Fixed (Treasury-based) | 10, 20, or 25 years |
💡 Key advantage: Only 10% down compared to 20–30% for conventional commercial loans. The SBA CDC portion carries a fixed rate for the entire term — no rate risk on 40% of your financing.
Eligible Uses for SBA 504 Funds
- Purchase of commercial real estate (owner-occupied)
- Construction or renovation of facilities
- Purchase of long-term machinery and equipment
- Land and building improvements
Frequently Asked Questions
What is the minimum down payment for an SBA 504 loan?
The standard minimum down payment is 10% of the total project cost. However, start-up businesses (operating less than 2 years) or special-purpose properties (like gas stations or hotels) may be required to put down 15–20%. The 10% minimum is one of the biggest advantages of the 504 program over conventional commercial financing which typically requires 20–30%.
How are SBA 504 interest rates determined?
The CDC/SBA portion of a 504 loan carries a fixed interest rate tied to the 5-year and 10-year US Treasury bond rates, plus a small spread. Rates are set monthly by the SBA. In 2025, CDC rates typically range from 5.5%–7.5%. The bank portion rate is separately negotiated between you and your lender and may be fixed or variable.
Who qualifies for an SBA 504 loan?
To qualify, your business must: be a for-profit US business, have a tangible net worth under $20 million, have an average net income under $6.5 million after taxes for the prior 2 years, and be owner-occupied (the business must occupy at least 51% of existing property or 60% of newly constructed property). Passive investment real estate does not qualify.
What fees are associated with SBA 504 loans?
SBA 504 fees include: CDC processing fee (1.5% of CDC loan), SBA guarantee fee (0.5%), funding fee (0.25%), and an ongoing annual servicing fee (around 0.625%). These fees are typically financed into the loan rather than paid upfront. The bank may also charge origination fees on its 50% portion, typically 0.5–1%.
How long does SBA 504 loan approval take?
The SBA 504 process typically takes 45–90 days from application to funding. The timeline includes bank underwriting (2–4 weeks), CDC review and approval (2–4 weeks), and SBA authorization (1–2 weeks). Working with an experienced CDC and lender who knows the process can significantly speed things up. Complex projects or incomplete applications can extend the timeline.
Can I pay off an SBA 504 loan early?
Yes, but the CDC/SBA portion has a prepayment penalty for the first half of the loan term. For a 20-year loan, there is a declining prepayment premium for the first 10 years. The bank portion's prepayment terms are separately negotiated. Early payoff of the bank portion is often possible without penalty after 3–5 years depending on your loan agreement.
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