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Purchase Commercial Real Estate

The SBA 504 loan is specifically designed to help small businesses buy, construct or improve commercial and industrial buildings as well as buy equipment with an economic life of 10 years or greater.

  • 25-year: 3.480%
    (note rate – 2.250%)
  • 20-year: 3.398%
    (note rate – 2.117%)
  • 20-year REFI: 3.400%
    (note rate – 2.117%)
  • 10-year: 3.553%
    (note rate – 1.953%)

Includes fees to CDC, SBA and central servicing agent; based on pricing published by NADCO 10-10-19
The SBA 504 rates listed above are effective from October 10 – November 6, 2019.


Key Advantages of SBA 504 loan over traditional business loans

  • Low down payment – the business owner pays only 10% down, borrowing up to 90% of the total financing needs, thus preserving cash for the business.
  • Long repayment terms – SBA repayment periods are longer than conventional bank loans – 20 years fully amortized for real estate loans and 10 years fully amortized for equipment loans. The small business owner’s monthly loan payment is more affordable, improving cash flow.
  • Fixed interest rate – below-market
  • Projected income consideration – SBA lenders consider projected income of a business in addition to historical cash flows. This is particularly advantageous for growing businesses.
  • Secondary source of payment less critical – With the SBA-504 loan guarantee, collateral may be less critical in qualifying a borrower for a loan.

Typical Structure, Purchase Commercial Real Estate, CDC Small Business

A SBA 504 loan has three participants:

  • Bank – provides a first trust deed loan for at least 50% of the total project cost.
  • CDC – provides SBA-guaranteed 504 loan for up to 40% of the total project cost, or a maximum of $5 million ($5.5 million for manufacturing businesses and qualifying “green” buildings).
  • Small Business Owner – contributes a down payment of at least 10%.

Qualifying Requirements

To qualify for a SBA 504 loan, a business must:

  • Be owner-operated
  • Be for-profit
  • Be organized as a sole proprietorship, corporation, partnership or limited-liability corporation (LLC)
  • Have net worth no greater than $15 million and net profit after taxes below $5 million in the last two operating years

Loan Program Requirements

  • 51% owner occupancy for existing building
  • 60% owner occupancy for new construction; 80% occupancy within 10 years
  • Equipment must have a minimum 10-year economic life

Terms, Rates and Fees

The bank portion of the loan package is typically amortized over 20 to 25 years. Rate term and fees are negotiable between the borrower and bank.

The CDC portion can be offered with term options of 10 or 20 years fully amortized. The interest rate on a 504 loan is set each month at an increment above the current market rate for 5-year and 10-year U.S. Treasury issues. Fees are approximately 2.625% of the loan amount, plus a fixed fee for a legal review. All fees are financed within the 504 loan.

How to Apply

Contact one of our loan officers in your area – click HERE. They can provide a loan pre-qualification in just 24 hours.

The complete process from application submission to disbursement of funds takes approximately 45 to 60 days, depending on the complexity of the loan. CDC provides a checklist to keep the process simple for the small business owner. We will work with the owner, accountant, banker, lawyer or and do all of the analysis, packaging and SBA interfacing for the borrower.

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