SBA 504 Loan

SBA 504 Structure and Mechanics

• Senior bank loan (50%): 1st lien position; 10–25 year term; fixed or variable; bank-priced
• CDC debenture (40%): 2nd lien; 20-year (real estate) or 25-year (new construction) fixed-rate; SBA-guaranteed; CDC-administered
• Borrower equity (10%): typically cash; new businesses or special-use properties may require 15–20%
• Loan amount cap: $5MM standard; $5.5MM for manufacturers and energy projects
• Occupancy requirement: 51%+ existing property; 60%+ new construction; 80% within 10 years for new construction
• Use of proceeds: owner-occupied real estate, machinery/equipment (10+ year life), construction, renovation
• Eligibility: for-profit small business; tangible net worth ≤ $20MM; net income ≤ $6.5MM after taxes (5-year average)

Current Florida SBA 504 Rates and Costs

• CDC debenture rate: typically tied to 10-year Treasury at debenture pricing; current fixed rate often in the 6–7% range
• Bank senior rate: bank-priced (SOFR + spread or fixed); typically 6.5%–8.5% current
• Blended effective rate: typically 6.5%–7.5% blended given current rate environment
• CDC fees: processing fee 1.5%; funding fee 0.50%; SBA guarantee fee 0.50%; CSA fee 0.10% (all typically rolled into debenture)
• Prepayment: CDC debenture has 10-year declining prepayment penalty starting at full first-year coupon
• Closing timeline: typically 45–90 days from application to closing

Florida Use Cases

• Medical practice buyout: physician group acquiring its medical office building — common Orlando/Tampa healthcare market
• Industrial owner-user: manufacturer or distributor acquiring its warehouse/manufacturing facility
• Restaurant real estate: restaurant operator acquiring its restaurant property (FF&E and brand-specific build-out)
• Professional services: law firm, accounting firm, consulting practice acquiring office building
• Retail owner-user: retailer acquiring its retail property (subject to occupancy thresholds)
• Hotel ownership: hotel operator acquiring property (subject to flag and operating requirements)
• Self-storage owner-user: storage operator acquiring facility
• Florida growth advantage: FL population growth and small business migration support strong owner-user demand

What is the SBA 504 loan?

The SBA 504 loan is a U.S. Small Business Administration program providing long-term, fixed-rate financing for owner-occupied commercial real estate and major fixed assets. Standard structure: 50% senior bank loan + 40% Certified Development Company (CDC) debenture (SBA-guaranteed) + 10% borrower equity. Tenants must occupy 51%+ of existing property (60%+ for new construction). Loan amounts up to $5MM (or $5.5MM for manufacturers/energy projects).

What's the down payment on an SBA 504 loan?

Standard SBA 504 down payment is 10% of total project cost — significantly lower than conventional owner-occupied CRE financing which typically requires 25–35% down. Newer businesses (operating less than 2 years) or special-use properties (hotels, restaurants, gas stations, certain medical) may require 15–20% down. The lower down payment makes SBA 504 particularly attractive to small business owners looking to convert rent expense to equity.

What are current SBA 504 rates?

Current SBA 504 rates: CDC debenture rate is typically tied to 10-year Treasury at debenture pricing — often in the 6–7% range currently. Bank senior 50% piece is bank-priced (SOFR + spread or fixed), typically 6.5–8.5%. Blended effective rate typically 6.5–7.5% in current rate environment. CDC debenture is fixed for the full 20- or 25-year term — often the lowest fixed-rate long-term capital available to small businesses.

What's the difference between SBA 504 and SBA 7(a) loans?

SBA 504 is structured specifically for owner-occupied real estate and major fixed assets — 50/40/10 structure with CDC debenture. SBA 7(a) is more flexible, can be used for working capital, business acquisition, refinance, or real estate — single bank loan up to $5MM with SBA guarantee, typically variable rate. 504 advantages: lower fixed rate, longer term (20–25 years), down payment as low as 10%. 7(a) advantages: more use-of-proceeds flexibility, can include working capital.

Who can structure an SBA 504 loan in Florida?

Michael R. Linton and Linton Global Solutions have active relationships with Florida Certified Development Companies (CDCs) and SBA preferred lenders. The team structures SBA 504 placements across Florida — owner-occupied industrial, medical office, professional service offices, restaurants, hotels, and retail. 39 years of Florida CRE transaction experience and direct CDC relationships across Orlando, Tampa, and the I-4 corridor produces SBA 504 packages that close on schedule with optimal blended pricing. Call (312) 612-1031.

Article Summary

SBA 504 = U.S. Small Business Administration loan for owner-occupied CRE and major fixed assets. Structure: 50% senior bank + 40% CDC debenture (SBA-guaranteed) + 10% borrower equity. Loan cap $5MM ($5.5MM mfg/energy). Occupancy: 51%+ existing, 60%+ new construction. Current rates: CDC debenture 6–7%, bank senior 6.5–8.5%, blended 6.5–7.5%. CDC debenture is 20- or 25-year fixed. Use cases: medical practice buyout, industrial owner-user, restaurant, professional services, retail, hotel, self-storage. Eligibility: for-profit small business; tangible net worth ≤ $20MM; net income ≤ $6.5MM (5-yr avg).

Key Takeaways

• ✓SBA 504 = 50/40/10 structure for owner-occupied CRE.
• ✓10% down vs. 25–35% conventional — material cash advantage.
• ✓CDC debenture is 20- or 25-year fixed at debenture pricing.
• ✓Loan cap $5MM ($5.5MM manufacturers / energy).
• ✓Occupancy: 51%+ existing property; 60%+ new construction.

About Michael R. Linton

Michael R. Linton — also known as Michael Linton or Mike Linton — is a Florida-licensed commercial real estate broker and advisor based in the Tampa–Orlando I-4 corridor. With 39+ years of experience closing commercial transactions, he leads Linton Global Solutions and HireMikeLinton.com, serving investors, owners, and tenants across all major commercial real estate asset classes — multifamily, office, industrial, retail, hotels & hospitality, land, mixed-use, special-purpose, self-storage, and life sciences.

Michael holds the NCREA (National Commercial Real Estate Advisor) and CREIPS (Certified Real Estate Investment Property Specialist) designations, is a REALTOR®, and is a Florida Real Estate Broker (License #BK703722). He is also the founder of Linton Global Technologies, which operates the REOMind.ai AI-powered REO disposition platform serving 500+ banks.

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Works Cited

1. U.S. Small Business Administration. "504 Loan Program." SBA, https://www.sba.gov/funding-programs/loans/504-loans. Accessed Jul 20, 2026.
2. National Association of Development Companies (NADCO). "504 Loan Program Resources." NADCO, https://nadco.org/. Accessed Jul 20, 2026.
3. CDC Small Business Finance. "SBA 504 Lending Updates." CDC Small Business Finance, https://cdcloans.com/. Accessed Jul 20, 2026.
4. Florida SBA District Offices. "Florida SBA Lending." SBA Florida, https://www.sba.gov/offices/district/fl/. Accessed Jul 20, 2026.

Disclosure & Compliance

Disclosure: This article discusses proprietary technology developed by Linton Global Technologies. Michael R. Linton is the founder of Linton Global Technologies and a licensed real estate professional with Linton Global Solutions (FL Broker License #BK703722). This content is for informational purposes only and does not constitute investment, legal, or financial advice.

Compliance Statement: All CREDDS and REOMind.ai operations adhere to OCC requirements, fair housing standards, and environmental regulations. Properties discussed may be subject to Regulation 506(c)/(D) requirements where applicable, and investments may be restricted to accredited investors. Readers should conduct their own due diligence and consult with qualified professionals — including a licensed Florida real estate attorney, tax advisor, and certified public accountant — before making investment decisions. Past performance does not guarantee future results.