The SBA 504 Loan

Small Business Administration Financing for real estate, heavy equipment, or other fixed assets for your small business.

If you’re looking for a way to purchase real estate, heavy equipment, or other fixed assets for your small business, an SBA 504 loan could be a fantastic solution. In 2020, the SBA 504 loan program had a year of increased performance from 2019, with more than 7,000 loans made for a total dollar amount of more than $5.8 billion, making it one of the fastest-growing loan programs the SBA has to offer. Here are a few facts about the SBA 504 loan:

2021 Sample SBA 504 Loan Terms:

  • Loan Size: The SBA 504 loan can provide up to $5 million for small businesses and up to $5.5 million for small manufacturing companies

  • Loan Term: 20 years for land and buildings, 10 years for heavy equipment

  • Interest Rates: Vary, but current maximum interest rates for the CDC portion of an SBA 504 loan are between 2.08 and 2.18% above the relevant U.S. Treasury Index (5-year index is used for 10-year loans, while the 10-year index is used for 20-year loans).

  • Loan Use: Land, real estate, heavy equipment, and other fixed assets. 504 loans are not allowed for working capital

  • Credit Score: No official minimum score set by the SBA, but lenders typically require scores of 680+

  • Down Payments: Minimum 10% down payment required for most borrowers

  • Timing: Typically takes between 65 to 75 days to close on real estate loans, heavy equipment loans may close faster