SBA 504 Loan Program

The U.S. Small Business Administration (SBA) 504 loan program was developed by Congress to assist growing businesses by offering an attractive financing option for real estate and equipment needs. The SBA administers the program with the objective of providing funding to projects that meet one of the following Economic Development Objectives:

Projects that result in job creation/retention:

SBA 504 Loan Structure

Once a business identifies its eligible funding needs, such as building or equipment purchases, that dollar amount is defined as the project costs. The financing structure of through the SBA 504 program is typically as follows:

  • A financial institution provides 50% of funding for project costs
  • SBA/BLP provides a direct loan for up to 40% of financing for project costs
  • Borrower provides a minimum of 10% equity towards project costs

An additional 5% cash equity is required in each situation below reducing SBA/BLP financing portion:

  • New business:
    Defined as Less than two years old.
  • The building being purchased or constructed is considered a single purpose:
    Defined as not easily converted to other uses, i.e. gas station, hotel.

Pie Chart 50% Bank 40% SBA 10% Borrower

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Typical SBA 504 Structure
Source of Funding Participation Level Lien Position Interest Rate Real Estate Term Equipment
Financial Institution 50% 1st Bank Determined Minimum 10 years Minimum
7 years
BLP/SBA 504 40% 2nd Fixed 20 years 10 years
Borrower 10%        



'Sources and Uses of Funds' using the SBA 504 Program for a real estate and equipment purchase of $1 million.

Project Cost Needs:  Sources of Funds:
Real Estate Purchase $   600,000  Financial Institution  (50%) $   500,000
Equipment $   400,000  BLP/SBA 504         (40%) $   400,000
Total Project $1,000,000  Borrower                 (10%) $   100,000
   Total Funding $1,000,000

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SBA 504

June 2019

25-Year Fixed Rate:


20-Year Fixed Rate:


10-Year Fixed Rate:



Benefits, Eligibility and Application Process for SBA 504 Program

              Click here to determine                                 Click here to determine
             if your customer qualifies
                           if your business qualifies