Close this search box.

Is The SBA 504 Loan Program Right For Your Business?

Are you looking to buy or build your own commercial building for your growing business, but want to conserve capital to cover your operating expenses?

The SBA 504 program, available to small business owners, may be the right choice for you.


  • The purchase and/or renovation of an existing building
  • Land purchase & new construction
  • The purchase of large equipment with a useful life of at least 10 years
  • Refinance of loans used for eligible project costs

Conventional bank financing requires a 20% or more injection1 towards the total purchase or project cost of a construction project, but the SBA 504 program will typically require only a 10% injection of the purchase price or total project cost. In some situations, the 10% injection may also include the loan soft costs such as the appraisal, title insurance, escrow, loan fees, etc. if supported by the appraised value.


  1. Bank Loan: A first mortgage equal to 50% of the project cost or appraised value, whichever is less. The loan rate, terms, and conditions are determined by bank.
  2. SBA Loan: A second mortgage equal to 40% of the project cost or appraised value, whichever is less. Terms are typically 20 years for real estate and 10 years for equipment, fully amortized with no balloon payments. The rate is fixed for the full term of the loan with an interest rate below market. As rates change monthly, this rate is determined at the time of SBA funding.
  3. Injection: This is usually 10% of the total project cost or appraised value, whichever is less. If the building is considered “special purpose” — such as a gas station, car wash, or movie theater — an additional 5% injection will be required.

This program is designed for owner-occupied properties. This means your business must occupy at least 51% of the square footage of the purchased building or 60% initially before reaching 80% within 10 years for a constructed building.

Once the bank obtains SBA approval, it will provide the interim financing for your project until the SBA loan is put in place. The time frame for the SBA 504 process is usually 2-3 weeks longer than it is for conventional financing; so, borrowers are encouraged to factor in this extended time-period when considering at this program.

All Community First Bank commercial lenders are experienced with the SBA 504 program, and our team is available to provide more details or answer any questions you may have regarding your eligibility.

1. Injection is a down payment that certain applicants must provide to qualify for an SBA 7(a) loan or SBA 504 loan. All 504 loan applicants must provide an equity injection typically equal to 10% of the loan amount.


Vice President and Commercial Lender, Community First Bank

NMLS ID #641067


All bank products are offered by Community First Bank.

Community First Bank. NMLS #409021.

equal house blue logo fdic logo


This memorandum expresses the views of the author as of the date indicated and such views are subject to change without notice. Community First Bank, HFG Trust, and HFG Advisors have no duty or obligation to update the information contained herein. Further, Community First Bank, HFG Trust, and HFG Advisors make no representation, and it should not be assumed that past investment performance is an indication of future results. Moreover, wherever there is potential profit there is possibility of loss. This memorandum is being made available for educational purposes only and should not be used for any other purpose. The information contained herein does not constitute and should not be construed as an offering of advisory services, banking services, or an offer to sell or solicit and securities or related financial instruments in any jurisdiction. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Community First Bank, HFG Trust, and HFG Advisors believes that the sources from which such information has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. This memorandum, included the information contained herein, may not be copied, reproduced, republished, or posted in any form without the prior written consent of Community First Bank and/or HFG Trust and/or HFG Advisors. HFG Advisors, Inc, is a wholly owned subsidiary of HFG Trust, LLC. HFG Trust, LLC is a Washington state-registered Trust company and wholly owned subsidiary of Community First Bank.