What are the current SBA 504 interest rates in 2026?

As of June 2026, SBA 504 CDC debenture rates are approximately 5.88% for 10-year terms, 6.16% for 20-year terms, and 6.11% for 25-year terms. Manufacturing businesses receive rates approximately 25 basis points lower. These rates are fixed for the entire term with no resets or balloon payments.

What are the eligibility requirements for an SBA 504 loan?

To qualify for an SBA 504 loan, your business must be for-profit, have a tangible net worth under $20 million, average net income under $6.5 million for the prior two years, and occupy at least 51% of an existing building or 60% of new construction. The business must be U.S.-based and the property must be owner-occupied, not investment real estate.

How long does it take to get an SBA 504 loan approved?

The SBA 504 loan process typically takes 60 to 90 days from application to funded closing. This is longer than conventional commercial loans (30-60 days) or SBA 7(a) loans (30-60 days) because the 504 involves two lenders: a bank providing the first-lien mortgage and a CDC providing the SBA-guaranteed debenture.

Can I use an SBA 504 loan to buy an investment property?

No. SBA 504 loans are strictly for owner-occupied commercial real estate. The borrowing business must occupy at least 51% of an existing building or 60% of new construction. Investment properties, passive rental entities, and properties where the business occupies less than 51% are explicitly excluded.

What is the maximum loan amount for an SBA 504 loan?

The CDC debenture portion caps at $5 million for most projects, rising to $5.5 million for small manufacturers and qualifying energy projects. Because the CDC portion is only 40% of the total stack, a $5 million debenture supports a total project of roughly $12.5 million when combined with the bank 50% and borrower 10%.

SBA 504 vs SBA 7(a) — which is better for buying commercial property?

SBA 504 is better for pure real estate purchases because it offers a fixed rate for the full 20-25 year term with no balloon, and only requires 10% down. SBA 7(a) is better when you need working capital, inventory, or goodwill financing alongside the real estate purchase, since 504 cannot fund those items. 7(a) has variable rates up to 9.75% but can finance the entire business acquisition including intangible assets.

2026 OWNER-OCCUPIED COMMERCIAL REAL ESTATE FINANCING GUIDE

Commercial Real Estate Loans for Small Business 2026: SBA 504 & Bank Rates

Q: What is an SBA 504 loan and how does it work?

An SBA 504 loan is a three-party financing structure for owner-occupied commercial real estate: a conventional bank provides 50% of the project cost as a first-lien mortgage, a Certified Development Company (CDC) provides 40% through an SBA-guaranteed debenture at a fixed rate, and the borrower contributes 10% as equity. The CDC portion carries a fixed rate tied to the 10-year Treasury, fully amortizes over 10, 20, or 25 years, and has no balloon payment.

Q: How much down payment is required for an SBA 504 loan?

The standard down payment for an SBA 504 loan is 10% of the total project cost. Startups (under 2 years old) must contribute 15%, and special-use properties (hotels, gas stations, car washes, self-storage) require 20%. This compares favorably to conventional commercial loans that typically require 20% to 30% down.

Buy your business building with just 10% down using SBA 504 financing. Fixed rates from 5.88% APR, terms up to 25 years, and no balloon payments on the SBA portion.

David Rodriguez

Refinance & Rate Specialist

September 1, 202615 min readExpert

Mortgage RefinancingRate AnalysisMarket Trends

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📋 Quick Answer: SBA 504 Loan Basics

An SBA 504 loan lets your small business buy an owner-occupied commercial building with only 10% down. The structure is 50% bank first mortgage + 40% SBA-guaranteed CDC debenture (fixed rate) + 10% borrower equity. As of June 2026, the CDC fixed rate is approximately 5.88% (10-year), 6.16% (20-year), and 6.11% (25-year). Your business must occupy 51%+ of the building, have a net worth under $20M, and average net income under $6.5M. You can compare commercial lenders and check your eligibility here.

How the SBA 504 Loan Works: The 50/40/10 Structure

The SBA 504 loan isn't a single loan — it's a three-party financing structure designed specifically to help small businesses buy owner-occupied commercial real estate with minimal cash down. Here's how the pieces fit together:

Component	Who Provides It	Percentage	Rate Type	Typical Term
First Mortgage	Bank or credit union	50%	Variable or fixed (market rate)	5–25 years
CDC Debenture	Certified Development Company (SBA-guaranteed)	40%	Fixed for full term	10, 20, or 25 years
Borrower Equity	You (the business owner)	10%*	N/A (cash injection)	N/A

* Down payment exceptions: Startups (businesses under 2 years old) must contribute 15% instead of 10%. Special-use properties — hotels, gas stations, car washes, self-storage facilities, standalone restaurants, and animal hospitals — require 20% down. If your business is both a startup and a special-use property, the equity injection rises to 20%.

The genius of the 504 structure is that the CDC's 40% sits in second position behind the bank's 50%, which reduces the bank's exposure to just half the project value. That's why banks are willing to write terms they'd never offer on a straight commercial mortgage — and how you get to 10% down on a building that would normally require 20-30% cash.

Ready to see if your business qualifies? You can compare commercial mortgage lenders and get pre-qualified here.

Current SBA 504 Interest Rates (June 2026)

SBA 504 CDC debenture rates are set monthly at each SBA debenture auction and are fixed for the full term once closed — no resets, no surprises. Here are the June 2026 effective rates:

Term	Standard Rate	Manufacturer Rate	Refinance Rate
25-Year	6.11%	5.87%	6.13%
20-Year	6.16%	5.91%	6.18%
10-Year	5.88%	5.58%	5.89%

Why these rates matter: The CDC fixed rate is the strongest rate-stability feature of any SBA product. Compare it to SBA 7(a) variable rates that can reach 9.75% APR, or conventional commercial mortgages that typically reset every 5-7 years. For a business planning to occupy the property for 20+ years, the 504 eliminates refinancing risk entirely on the SBA portion.

Manufacturing businesses (NAICS codes 31, 32, 33) receive rates approximately 25 basis points lower due to a waived annual service fee. The SBA also reinstated an upfront guaranty fee of 50 basis points for non-manufacturing projects in FY26.

SBA 504 vs SBA 7(a) vs Conventional Commercial Loans

Three main paths to finance owner-occupied commercial real estate. Here's how they compare head-to-head:

Feature	SBA 504	SBA 7(a)	Conventional
Down Payment	10%	10–15%	20–30%
Rate Type	Fixed (CDC portion)	Variable	Fixed 5-7 yrs, then reset
Max Rate (2026)	~6.11% (25-yr fixed)	Up to 9.75% variable	7.5%–9% variable
Max Term	25 years	25 years	5-7 years (balloon)
Balloon Payment	None (CDC portion)	No	Yes (typical)
Working Capital	No	Yes	Separate loan
Time to Close	60–90 days	30–60 days	30–45 days
Owner Occupancy	51% existing / 60% new	51%+	Lender discretion
Max Loan (CDC portion)	$5M ($5.5M mfg)	$5M total	No SBA cap

💡 When to Choose Which

• Choose SBA 504 if you're buying real estate only, want a fixed rate for 25 years, and don't need working capital.
• Choose SBA 7(a) if you need to finance goodwill, inventory, or working capital alongside the real estate purchase.
• Choose conventional if you have 20-30% to put down, want the fastest closing, and are comfortable with a 5-7 year reset.

Not sure which path fits your business? Get matched with commercial lenders who can structure the right deal for your situation.

SBA 504 Eligibility Requirements: The Complete Checklist

The 504 program uses its own size test rather than only the industry-by-industry standards. Here's what you need to qualify:

Business Size Requirements

✅ Tangible net worth under $20 million
✅ Average net income under $6.5 million (2-year average prior to application)
✅ For-profit entity only
✅ U.S.-based operations
✅ Not engaged in nonprofit, passive, or speculative activities

Property Occupancy Rules

✅ Existing building: Occupy 51% of rentable square footage immediately
✅ New construction: Occupy 60% immediately, 80% within 10 years
✅ Can rent out up to 49% to unaffiliated third parties
✅ Rental income from excess space can support debt service
❌ No pure investment properties or passive landlords

Credit & Financial Requirements

✅ Credit score: Typically 680+ (varies by lender)
✅ Debt Service Coverage Ratio (DSCR): Minimum 1.15x (most lenders prefer 1.25x+)
✅ Time in business: 2+ years preferred (startups qualify with 15% down)
✅ Personal guarantees required from owners with 20%+ stake
✅ Job creation requirement: 1 job per $95,000 of CDC debenture (changed Oct 2025 from $90,000)
✅ No prior defaults on SBA loans within 3 years

The job-creation threshold is important: for a $5 million CDC debenture, your business must create or retain approximately 53 jobs. Small manufacturers and energy projects have a higher threshold of $150,000 per job (approximately 33 jobs for $5M). If you can't meet the job requirement, you may qualify under a public policy goal instead (such as revitalizing a business district or expanding exports).

Real Example: $1.5M Commercial Building with SBA 504

Let's break down the actual numbers for a typical small business buying a $1.5M warehouse:

Component	Amount	Rate	Term	Monthly Payment
Bank First Mortgage	$750,000	7.5% (variable)	25 years	$5,543
CDC Debenture	$600,000	6.11% (fixed)	25 years	$3,916
Borrower Equity	$150,000	N/A	N/A	N/A
Total Monthly Payment				$9,459

📊 Compare to Conventional

A conventional commercial loan on the same $1.5M building would require $300,000–$450,000 down (20-30%) instead of $150,000. That's $150,000–$300,000 more cash tied up in the building instead of available for business operations, hiring, or inventory. The 504's 10% down structure preserves working capital — that's the entire point of the program.

Want to see what your monthly payment would look like? Get a customized commercial loan quote based on your business financials.

What SBA 504 Loans Cannot Finance

The 504 program is strictly for fixed assets — no working capital, no inventory, no existing debt payoff. Here's the full exclusion list:

❌ Not Eligible Under SBA 504

• Working capital or operating expenses
• Inventory purchase
• Goodwill or business acquisition intangibles
• Investment rental properties (no owner-occupancy)
• Passive investment entities
• Properties under 51% owner occupancy
• Most financial businesses
• Nonprofit organizations
• Speculative real estate development

✅ Eligible Under SBA 504

• Owner-occupied commercial real estate (purchase)
• New construction (ground-up building)
• Facility renovations and leasehold improvements
• Heavy machinery and equipment (10+ year useful life)
• Energy-efficiency upgrades
• Refinancing existing commercial mortgage debt
• Land acquisition with building plans
• Parking lots and site improvements

If you need working capital or goodwill financing alongside your real estate purchase, the SBA 7(a) loan can fund those items. Many businesses use a combination: 504 for the building, 7(a) for the working capital. Talk to a commercial lender about structuring both loans together.

Top Commercial Real Estate Lenders for Small Business (2026)

Not every lender offers SBA 504 loans — you need a CDC (Certified Development Company) plus a participating bank. Here are the top options:

Lender	Loan Type	Min. Down	Best For	Action
Truss Financial GroupTop Pick	SBA 504, 7(a), Non-QM	10%	Investors, owner-occupied, mixed-use	Get Pre-Approved →
National CDC Network	SBA 504 (CDC debenture)	10%	Pure SBA 504 with 25-year fixed	Find a CDC →
LendingTree Commercial	SBA 7(a), conventional	10-15%	Comparing multiple commercial offers	Compare Lenders →

The SBA 504 Application Process: 5 Steps to Closing

The 504 process takes 60-90 days because you're coordinating two lenders. Here's the step-by-step roadmap:

Identify the Property & Get Pre-Qualified

Find a property that meets the 51% occupancy rule. Get pre-qualified with a commercial lender to confirm your business financials support the loan. Gather 2-3 years of business tax returns, personal tax returns, YTD financials, and a personal financial statement.

Apply to a Bank for the 50% First Mortgage

Submit your loan package to a bank or credit union for the first-lien mortgage (50% of project cost). The bank underwrites their portion independently. Expect them to request a commercial appraisal, environmental assessment, and title report.

Apply to a CDC for the 40% SBA Debenture

Concurrently, apply to a Certified Development Company for the SBA-guaranteed 40% portion. The CDC submits your application to the SBA for approval. This is where the job-creation or public-policy goal is documented.

SBA Approval & Rate Lock

The SBA reviews and approves the CDC debenture. Once approved, the CDC rate is locked at the next monthly debenture auction. The bank rate is set at closing based on their own pricing.

Closing & Funding

Both loans close simultaneously. The bank funds their 50%, the CDC funds their 40%, and you bring your 10% equity. You receive the keys and start making monthly payments to the bank and CDC separately.

Start your commercial loan pre-qualification today — it takes 5 minutes and won't impact your credit.

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Frequently Asked Questions

What is an SBA 504 loan and how does it work?

An SBA 504 loan is a three-party financing structure: a bank provides 50% as a first-lien mortgage, a CDC provides 40% through an SBA-guaranteed debenture at a fixed rate, and the borrower contributes 10% equity. The CDC portion is fixed for the full 10, 20, or 25-year term with no balloon payment.

Compare SBA 504 lenders near you →

How much down payment do I need for an SBA 504 loan?

The standard down payment is 10% of the total project cost. Startups (under 2 years old) need 15%, and special-use properties (hotels, gas stations, car washes, self-storage) require 20%. Conventional commercial loans typically require 20-30% down for comparison.

Get pre-qualified for an SBA loan →

What are the current SBA 504 rates in 2026?

As of June 2026: 10-year at 5.88%, 20-year at 6.16%, and 25-year at 6.11%. Manufacturing businesses get rates ~25bps lower. These are fixed for the entire term — no resets, no balloons.

Check current commercial loan rates →

Can I use SBA 504 to buy an investment property?

No. SBA 504 is strictly for owner-occupied commercial real estate. Your business must occupy at least 51% of an existing building or 60% of new construction. For investment properties, consider a DSCR loan or conventional investment mortgage instead.

How long does the SBA 504 process take?

Typically 60-90 days from application to funded closing. The process involves two lenders (bank + CDC), an SBA approval step, a commercial appraisal (2-4 weeks), and potentially an environmental assessment. Plan ahead if you have a lease expiration deadline.

Compare commercial mortgage lenders →

What's the maximum SBA 504 loan amount?

The CDC debenture caps at $5 million ($5.5M for manufacturers and energy projects). Since the CDC is 40% of the stack, a $5M debenture supports a total project of ~$12.5M. There's no hard cap on the bank's 50% first mortgage.

Get a commercial loan quote →

SBA 504 vs SBA 7(a) — which is better?

504 wins on rate stability (fixed for 25 years vs variable up to 9.75%) and down payment (10% vs 10-15%). 7(a) wins on flexibility (can fund working capital, inventory, goodwill) and speed (30-60 days vs 60-90). Use 504 for pure real estate, 7(a) when you need mixed-use financing.

Compare SBA 504 vs 7(a) lenders →

What credit score do I need for an SBA 504 loan?

Most lenders want a personal credit score of 680+. The SBA doesn't set a hard minimum, but individual banks add their own overlays. Strong business financials (DSCR of 1.25x+, 2+ years of profitable operations) can compensate for a borderline credit score.

Check SBA loan requirements →