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Understanding SBA 504 Loan Rates, Requirements & Terms is Integral to Financing Real Estate for Small Businesses

As a seasoned commercial real estate lender, AVANA CUSO has facilitated SBA 504 loans to small business owners across the nation for over 20 years. AVANA CUSO utilizes Small Business Administration (SBA) 504 loans to help entrepreneurs refinance, acquire, renovate, build and/or purchase commercial real estate and assets. The loan structure provides low-rate, minimal down payment financing solutions that help small business owners lock in occupancy costs and build equity through building ownership. But before applying for a SBA 504 loan, it’s important to first understand SBA 504 loan rates, requirements, terms and more.

What is the SBA 504 Loan Program?

The SBA 504 loan program “provides long-term, fixed-rate financing of up to $5 million for major fixed assets that promote business growth and job creation,” according to the SBA. Such loans are available through Certified Development Companies (CDCs), the SBA’s community-based partners who promote economic development within their communities. These CDCs partner with third-party lenders, like AVANA CUSO, to provide permanent financing solutions to small business owners.

The SBA 504 loan program can be used to finance a variety of assets, including the purchase or construction of new buildings, land, machinery or equipment. The program cannot be used for working capital or investment in rental real estate.

The financing is structured as follows:

  • 50% of costs are financed through a third-party lender, such as a credit union
  • 40% of the project costs are financed through a CDC
  • 10% is contributed by the small business owner

What are the SBA 504 Loan Requirements, Terms & Rates?

SBA 504 loan eligibility requirements include:

  • Operating a for-profit company in the United States
  • Having a book net worth of less than $15 million
  • Average net income of less than $5 million (after federal income taxes) two years prior to filing the SBA 504 loan application
  • A down payment of approximately 10%

Once you meet each of these criteria, you can apply for a loan of up to $5 million. However, candidates who are working on an energy-efficient or manufacturing project can apply for up to $5.5 million. Typical SBA loan terms range from 10 to 25 years. SBA 504 rates are currently as low as 2.86% (including fees), based on August 2021 debenture fundings.

How to Save Money Through a SBA 504 Refinance

On July 29, 2021, the SBA enacted a new ruling that expands business owner’s ability to use SBA 504 loans to refinance existing business debt. The new rules also enable small businesses to tap into the equity of their owner-occupied real estate to obtain cash for working capital to expand their business. To learn more about the latest ruling, read AVANA CUSO’s article “Debt Refinancing Available Through the SBA 504 Program.”



Established in 1998 and headquartered in Simi Valley, CA, AVANA CUSO offers competitive and collaborative commercial real estate loans. We partner with credit unions and connect them to investors across the United States. Additionally, we uniquely support and guide our partners through the entire lifecycle of SBA loans from application to approval, supporting credit unions and borrowers through the complex approval process. AVANA CUSO is a proud member of the AVANA Family of Companies.