SBA Loans For Real Estate
What is SBA?
The Small Business Administration (SBA) offers low-interest financing solutions for commercial real estate through its 7(a) and 504 loan programs, supporting acquisitions, refinancing, new development, and redevelopment. The SBA 504 program focuses on real estate, while the SBA 7(a) program covers real estate and other collateral, both offering up to 90% loan-to-cost (LTC) financing—helping small businesses grow with affordable, long-term funding.
SBA 504 Loan For Real Estate
For businesses seeking financing to purchase owner-occupied real estate, an SBA 504 Loan is an optimal choice. The SBA 504 Loan offers up to 90% financing, compared to 75% for more traditional lending sources, which enables your business to have additional liquidity for operations. The SBA 504 incentive for lenders is a 50% LTV while the SBA funds 40% in second position (Interest Rate Fixed for 20/25 years).
Eligibility Requirements
To qualify for an SBA loan, your business must meet certain criteria
- Must be a for-profit business operating in the U.S.
- Must meet SBA size standards, generally defined by employee count or revenue.
- Must have a viable business plan and demonstrate the ability to repay the loan.
- Must provide personal guarantees from business owners.
Comparison of SBA 7(a) vs. 504 Loans
| SBA 7(a) | SBA 504 | |
|---|---|---|
|
Loan Amount |
Up to $5 million |
Up to $5.5 million |
|
Amortization |
Up to 25 years (real estate-heavy) |
Up to 25 years |
|
Interest Rates |
Variable or fixed (higher than 504) |
Fixed, below-market |
|
Downpayment |
Varies (often 10–20%) |
10% |
|
Refinancing |
Limited to combined use with 504 |
Direct refinancing + cash-out |