Pre-Qualification SBA 504 Loan ApplicationGet it right now!

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504 vs. Conventional Loans

The SBA 504 loan has lower down payment requirements and also minimizes a small business’ cashflow considerations.

By allowing small businesses to put less money down and minimize their cash flow considerations, we make owning real estate an option for many small businesses that otherwise might not have the opportunity. Business owners can use their excess capital and increased cash flow to concentrate on growing their businesses instead of putting it into their real estate (a non-income-producing asset). And this is all in addition to the benfefits that come from simply owning instead of renting.

An SBA 504 loan provides up to 90% financing for commercial real estate with low monthly payments at below-market interest rates and in the process also creates new jobs for the community.

The following is a detailed comparison of the financing variables typically available to small business owners who want to acquire/construct their commercial real estate.


(SBA 504 Loan)


Bank Loan

Loan Amount Up to 90% financing of the total project cost (inclusive of land, construction/renovations, soft costs, and closing costs). 75% to 80% of the appraised value or purchase price, whichever is less.
Equity As little as 10% of the total project cost down. 20 to 25% plus closing and soft costs.
Term 1st Mortgage: 20 or 25 years.
2nd Mortgage:20 years.Usually 23 years blended. No balloons, only rate resets.
Frequently 5, 7, 10 or 15 years, then balloons.
Amortization 1st Mortgage: 20 or 25 years.
2nd Mortgage: 20 years.Usually 23 years blended, fully amortizing.
5-25 years.
Pricing 1st Mortgage: Competitive fixed or variable rates.
2nd Mortgage: Usually 0.5 to 0.75% less than competitive rates and fixed for 20 years.
Both loans are assumable, subject to qualifying.
Competitive fixed or variable rates. Usually not assumable.
Personal Guarantees Required. Usually required.
Prepayment Penalty 1st Mortgage: Varies by lender.
2nd Mortgage: 10-year declining prepayment.
Varies by lender.
Fees Usually 1.5% of 1st mortgage and 1% of 2nd mortgage. Blends to 1.27%, but is negotiable with strong credit scores. Usually 1.0% of loan amount.
Personal Credit Scores Usually no less than 650. Usually no less than 650.

Hopefully the above comparison helps you understand the benefits of an SBA 504 loan. If you have questions about this information, don’t hesitate to contact us so we can help clarify things for you.

Are you eligible for a 504 loan? Apply Today

Why a 504 Loan? SBA 504 vs 7(a) Loans