Government-backed · Fixed assets

SBA 504 Loan: Long-Term Fixed-Rate Asset Financing

The SBA 504 loan program provides long-term, fixed-rate financing for major fixed assets — primarily commercial real estate and heavy equipment. For businesses purchasing or renovating property, it's often the most cost-effective federal program available.

Fundember Editorial · Reviewed August 2026 · Source: SBA.gov · Methodology

Maximum amount: $5.5M+
Rate type: Fixed (CDC piece)
Maximum term: 25 years
Typical timeline: 60–90+ days

What is an SBA 504 loan?

Unlike the SBA 7(a) program which is general-purpose, the SBA 504 is specifically designed for acquiring major fixed assets that promote business growth and job creation. The loan is structured in two parts: a conventional first mortgage from a private lender (typically 50%) and a second mortgage from a Certified Development Company (CDC) — a nonprofit that works with the SBA — covering up to 40%. The borrower provides at least 10% down.

Eligible uses

Purchasing land and buildings
Construction or renovation of commercial real estate
Purchasing long-term machinery and equipment (10+ year life)
Improving land, utilities, parking, landscaping

Not eligible: working capital, inventory, most debt refinancing, or assets with short useful lives.

Potential advantages

Below-market, fixed interest rates

Low down payment (10% in many cases)

Long repayment terms (up to 25 years)

Up to $5.5M+ for special industries

Considerations

Restricted to fixed assets — not working capital

Complex two-lender structure

60–90+ day timeline is common

Generally requires 2+ years in business

Fundember is not affiliated with or endorsed by the U.S. Small Business Administration. Verify current SBA program requirements at sba.gov.

Could an SBA 504 fit this purchase?

Check Funding Fit if you are buying or renovating a long-lived asset — or see what else may fit.

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