Learn more about 504
504 SBA Loan Program Overview
The 504 SBA Loan Program is available for business owners looking to purchase real estate associated with their business (i.e. warehouse or office space). The Program allows you to obtain up to 90% financing as opposed to traditional bank financing which typically offers 65% - 75% loan to value. This advantage makes real estate ownership more obtainable for small business owners.
504 SBA Loan Structure
Your financing is divided into two separate loans: one from the bank (the "A" piece) and one coming from SBA (the "B" piece). The A piece is a traditional conventional owner occupied loan with at least a 5-year fixed rate, 10-year term and 25-year amortization. The A piece represents 50% of the total project.
The B piece from the SBA gives you the option for a 20 or 25-year fixed rate, term, and amortization. This is one of the great values about this Program. You never have to worry about the rate increasing! The B piece represents 40% of the project.
As the business owner, you are required to contribute the remaining 10% of the project.