SBA 504 Loans: Financing for Real Estate and Equipment

Investing in your business’s infrastructure can be a major milestone—and the SBA 504 Loan Program is here to help. Tailored for businesses planning long-term investments in real estate, renovations, or heavy equipment, this program offers funding solutions designed to support growth.

In this post, we’ll cover the details of the SBA 504 Loan, its structure, benefits, and how to determine if it’s the right fit for your business.

What is the SBA 504 Loan?

The SBA 504 Loan is specifically designed to help small businesses finance major fixed assets that drive growth and expansion.

Common Uses:

• Purchasing Commercial Real Estate: Office spaces, manufacturing facilities, or retail storefronts.
• Renovations or Expansions: Upgrading or adding new spaces to your existing business.
• Large Equipment Purchases: Machinery, vehicles, or specialized tools that support operations.

This loan is all about enabling businesses to invest in the physical infrastructure needed to scale.

Learn more about SBA 504 loans at SBA.gov.

Loan Amounts, Terms, and Structure

Loan Amounts

Borrow up to $5.5 million per project, ideal for larger investments.

Repayment Terms

Repayment terms are 10, 20, or 25 years, keeping monthly payments manageable for long-term projects.

Unique 50-40-10 Structure

The SBA 504 Loan involves three parties:

• 50%: A private lender (e.g., a bank).
• 40%: A Certified Development Company (CDC), backed by the SBA.
• 10%: You, the borrower, as a down payment.

This structure spreads risk across multiple entities, allowing for lower interest rates and longer repayment terms compared to traditional loans.

Learn about Certified Development Companies (CDCs) here.

Key Benefits of the SBA 504 Loan

1. Low Down Payment: Only 10% down, preserving cash flow for other business needs.
2. Fixed Interest Rates: The CDC portion of the loan often comes with a fixed rate, ensuring predictable monthly payments.
3. Long Repayment Terms: Extended terms keep payments manageable while supporting business growth.
4. Growth-Oriented Focus: Perfect for businesses investing in new locations, equipment, or facilities.

Explore SBA application requirements.

Is the SBA 504 Loan Right for You?

Consider the 504 Loan if:

• You’re planning a long-term investment in real estate, renovations, or equipment.
• You need larger funding amounts, up to $5.5 million, for major projects.
• You want predictable payments through fixed interest rates.
• You’re a veteran entrepreneur looking to scale your operations with manageable upfront costs.

If your business is poised for growth and needs infrastructure to support it, the SBA 504 Loan is an excellent choice.

Learn more about resources for veteran-owned businesses.

What’s Next?

Tomorrow, we’ll explore the SBA Express Loan, designed for businesses needing quick funding for smaller, immediate needs. Stay tuned to learn how it compares to larger programs like the 504 Loan.

If you’re ready to explore the SBA 504 Loan or other financing options, I’m here to guide you through the process. Visit AntonineCapital.com to get started. Don’t forget to sign up for our monthly newsletter at AntonineCapital.com/newsletter for expert tips and updates.