Your landlord just raised rent 30%. Again. Every dollar you pay builds their wealth, not yours. SBA real estate loans let you stop paying someone else’s mortgage and start building equity in property your business occupies.
Commercial property acquisition through SBA financing offers advantages conventional mortgages can’t match—lower down payments, longer terms, and rates that keep payments manageable.
Two Paths to Property Ownership
The SBA offers two primary programs for commercial real estate. Understanding the differences helps you choose the right structure.
| Feature | SBA 7(a) | SBA 504 |
|---|---|---|
| Maximum Loan | $5 million | $5.5 million (CDC portion) |
| Down Payment | 10-20% | 10% |
| Term Length | Up to 25 years | 10, 20, or 25 years |
| Interest Rate | Variable (prime-based) | Fixed (CDC portion) |
| Best For | Mixed-use (RE + working capital) | Pure real estate/equipment |
The Occupancy Requirement
SBA loans fund owner-occupied commercial property—not pure investment real estate. Your business must occupy at least 51% of the building for existing properties or 60% for new construction. According to SBA 504 program rules, you can lease remaining space to tenants, creating additional income.
Special Use Properties
Hotels, assisted living facilities, self-storage, and other special-purpose properties may require higher down payments (15-20%) due to their limited alternative uses. These properties still qualify for SBA financing but with adjusted terms.
The 504 Advantage for Real Estate
When your primary goal is property acquisition, the 504 program often provides better terms. The fixed-rate CDC portion (40% of project cost) locks your rate for the full term. According to the National Association of Development Companies, 504 rates typically run 0.5-1% below conventional commercial mortgages.
Building vs. Buying
Both SBA programs fund ground-up construction, not just acquisitions. Construction loans convert to permanent financing upon completion. If you can’t find the right property, building custom facilities may be your best path.
Our commercial real estate specialists analyze your situation and recommend the optimal program structure for your property goals.
Ready to Own Your Space?
Stop building your landlord’s equity. Discover how much property you can afford with SBA financing.
