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How SBA 504 Loans Compare to Traditional

Whether you're a lender or professional who wants to give options to your business clients or a business owner who wants to know more about SBA 504 loans and traditional loans for new buildings, renovations, and equipment, here's what you need to know about SBA 504 loans...


SBA 504 Loan 
Traditional Loan 
Loan Amount 
up to 90% financing of the total project cost (land, construction/renovations, soft costs, closing costs) 
75-80% of appraised value or purchase price, whichever is less 
10% of the total project cost  20-25% plus closing and soft costs 
1st Mortgage: 20 or 25 years
2nd Mortgage: 20 years.  No balloons or rate resets. 
Frequently, 5, 7, 10, or 15 years then balloons 
1st Mortgage: 20 or 25 years
2nd Mortgage: 20 years. 
 15 years 
1st Mortgage: Competitive fixed or variable rates.
2nd Mortgage: Usually 0.5-0.75% less than competitive rates and fixed for 20 years.

The least expensive financing available to most small business owners for commercial real estate. SBA 504 loans are assumable.
Competitive fixed or variable rates. Usually not assumable. 

SBA Loan Benefits 

The benefits of SBA 504 loans can have a major impact on business owners by preserving precious capital, having longer terms to pay back the loan, and needing only 10% down compared to 20-25% required on traditional loans. See all the benefits of an SBA 504 loan

Eligible Project Costs for SBA 504 Loans

  • Land
  • Site Improvements
  • Facility: Acquisition, Conversion, Expansion or Renovation, New Construction
  • Machinery and Equipment: Acquisition and Installation
  • Professional Fees Directly Attributable and Essential to the Project
  • Interim Financing

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