A conventional bank loan on owner-occupied commercial real estate typically asks for 25 to 35% down. SBA 504 asks for 10%. For a business owner buying the building they operate out of, that difference is often the whole decision between buying now and renting another five years.
504 is two loans stacked, not one: a bank first mortgage covering 50% of the project, a CDC (Certified Development Company) second covering 40%, and the borrower’s 10% equity. On a multi-use property where the business occupies enough of it, total leverage can reach 90%.
"Someone searching this has a building and a business. That’s the entire qualification, and it’s a better fit than most sponsors assume."
Medical and dental practices, veterinary clinics, auto repair and other owner-operated service businesses buying their own real estate. If the operating business will occupy the majority of the property, 504 is very likely the cheapest path to ownership available, and it’s the program we place most often in this category.