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Overcoming Appraisal Gaps with the SBA 504 Program - BLP - Business Lending Partners

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Overcoming Appraisal Gaps with the SBA 504 Program

Appraisal gaps can present a significant challenge for lenders and borrowers alike—often putting otherwise strong projects at risk. However, the SBA 504 loan program offers a practical solution that can help keep deals moving forward.

Unlike traditional financing, the 504 program allows a property to appraise at 90% of total project costs, helping lenders work around loan-to-value (LTV) limitations.

A Real-World Example (see graphic on the right):

A $1,000,000 project appraises at $900,000. Under a traditional 80% LTV, the loan drops from $800,000 to $720,000—requiring an additional $80,000 from the borrower and putting the deal at risk.

With the SBA 504 program, the structure could shift to:

A bank loan as low as $500,000
An SBA 504 loan up to $400,000
A borrower’s equity potentially reduced to as little as $100,000

Why It Matters

This approach helps preserve borrower cash, maintain deal viability, and provide access to long-term, fixed-rate financing with a predictable 25-year term.

For lenders, the SBA 504 program is a powerful tool to overcome appraisal challenges and close more deals.

CONTACT BLP FOR YOUR BUSINESS LENDING NEEDS

Grace Kieckbusch

Vice President & Loan Officer

Grace Kieckbusch is a commercial lender who loves finding financing solutions that help small businesses thrive. A Magna Cum Laude graduate of UW–Parkside, she began her career at BLP after interning with the team during college.

Green Bay Office920.384.0385 Grace@blp504.org