Buying Your Own Building with an SBA 504
Owning your building turns rent into equity and protects you from rising rents. The SBA 504 loan was designed for exactly this.
Is it right for you?
Good signs:
- Your business has steady cash flow, ideally two or more years.
- You plan to stay in the area for many years.
- You will occupy at least 51% of an existing building (60% for new construction). You can lease the rest.
- You can put down about 10% (15–20% for startups or special-purpose properties).
The structure
| Piece | Share | Notes |
|---|---|---|
| Bank first mortgage | ~50% | Bank’s own rate and terms |
| CDC second mortgage | ~40% | Long-term fixed rate, SBA-backed |
| Your down payment | ~10% | More for startups or special-purpose buildings |
Learn more in what a CDC is.
Step by step
- Get prequalified with a bank that works with CDCs, before you make an offer.
- Find the property and sign a purchase contract with a financing contingency.
- The bank and the CDC review your business financials and the property.
- Third-party reports: appraisal, environmental review, survey, title.
- Approval by the bank and the CDC (with the SBA).
- Closing: the bank funds its part plus an interim loan for the CDC portion.
- Debenture sale: the CDC portion is funded through a bond sale and the interim loan is paid off. Your fixed rate is set then.
Costs to plan for
Appraisal, environmental reports, title insurance, legal fees, CDC and SBA fees (often financed), and moving costs. Ask for a full estimate upfront.
Find 504 lenders and CDCs
In our lender finder, select SBA 504 and your state to see the most active CDCs and partner banks. Use our calculator to compare a mortgage payment with your current rent.
Frequently asked questions
How much down payment to buy a building with a 504?
About 10%, or 15–20% for startups and special-purpose properties.
When is the 504 fixed rate set?
When the CDC's debenture is sold after closing; an interim loan covers the CDC portion until then.
Can I rent out part of the building?
Yes, as long as your business occupies at least 51% of an existing building or 60% of new construction.
Take the next step
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Educational information, not legal or financial advice. We are not a lender and are not affiliated with the SBA. Disclaimer