The Small Business Administration (SBA) 504 loan program is a financial assistance program offered by the SBA to help small businesses obtain long-term, fixed-rate financing for the acquisition and improvement of land, owner-occupied properties, and equipment. 

The SBA 504 loan program provides long-term, fixed-rate financing for small and middle market businesses, offering maturity of up to 20-year term for Real Estate and up to 10 years for equipment. 

The SBA 504 loan program is not a direct lending program, meaning that the SBA does not provide the funds for the loan directly to the small business. Instead, the SBA works with participating lenders to underwrite and service the loan.

It’s important to note that the SBA 504 loan program consists of two loans up to 90% LTV – a conventional loan, provided by a participating lender and offering up to 60% LTV, and a 2nd loan offered by a Certified Development Company (CDC) which typically covers up to 40% of the total project or purchase cost. A CDC is a non-profit corporation certified and regulated by the SBA. A participating lender will work with a CDC to package, underwrite, process and service SBA 504 loans. The interest rate offered by a CDC is typically lower than the conventional portion of the loan. The resulting loans offer up to 90% LTV on Real Estate purchase, construction, and refinance, and usually carry a lower blended rate than offered by the SBA 7(a).

SBA 504 Program Details

  • Loan amount: $500,000 to $15 million
  • LTV Up to 90%
  • Rates Starting at 4%
  • Conventional loan terms 20 years
  • SBA CDC loan terms 20 years
  • Equipment loan terms 10 years

To qualify a business must meet qualification requirements set by the SBA and approved by the participating lender. To qualify the borrowing entity must show sufficient net income to service the loan, occupy at least 51% of the subject property, must provide at least 2 years of business tax returns, and must be owned by a U.S Citizen or Green Card Holder. All shareholders with 20% stake or higher must personally guarantee the loan. All borrowers must have a minimum credit score of 680 or higher.

Required Documentation:

As with other types of small business loans, the SBA and lender evaluate whether an applicant can comfortably repay the loan without the risk of default. To demonstrate their creditworthiness and financial stability, applicants must provide extensive financial and business documents as part of the application process. These are some of the documents you may need to provide:

  • Borrower Information Form (SBA Form 1919)
  • Statement of Personal History (SBA Form 912)
  • Personal Financial Statement (SBA Form 413) for all stakeholders with 20% stake or higher
  • Personal and business tax returns for the last three years
  • YTD Financial statements, as well as profit and loss statements from the last three fiscal years
  • Projected financial statements, including a two-year projection of income and finances
  • Copies of business certificate or license, leases and other relevant legal documents
  • An overview and history of the company and owner resumes
  • Property Purchase contract (if applicable)
  • Detailed construction budget, architectural drawings, and all necessary approvals (If applicable)

In conclusion

To apply for an SBA 504 loan, you can approach any of the SBA-approved lenders. A list of the approved and participating lenders can be found on the SBA website.

You may also choose to work with business advisors, such as 504 Advisors, Inc., to help you navigate the application and the underwriting process. 

About 504 Advisors, Inc.

504 Advisors functions as a consultant and an advisor for our clients throughout the entire SBA & Real Estate financing process. As business owners and entrepreneurs, we understand how daunting business financing process can be, and use our two decades of experience in commercial finance to guide you through the financing options and the loan application process.

Our goal is to be your trusted financial partner and advisor, by providing our clients with access to capital and financing solutions necessary to run their business.

Capitalize on our relationships and find the best loan that fits your needs. For more information visit

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