Real estate can be an effective way to build an investment portfolio or to grow business efforts and achieve greater success. However, many small businesses struggle with accessing the right financing opportunities to purchase or renovate commercial properties compared to larger businesses. Fortunately, there are options available for small businesses seeking to fund commercial real estate.

Specifically, the 504 Loan Program provides small businesses access to long-term, fixed-rate financing often used by larger businesses to accomplish their goals. The 504 Loan Program considers a business small if it has a net worth under $7 million and net profits, after taxes, under $2.5 million. 

Typically, a 504 project is structured to have approximately fifty percent of the costs provided from a private-sector lender, which is provided as a ten-year term at a variable or fixed rate. Only ten percent is required as a down payment for the terms, which is highly attractive for small businesses that may have limited access to capital for down payments. Along with purchasing commercial real estate, the 504 Loan Program is accessible for a wide variety of projects, including the construction of new facilities for the business, landscaping, renovating or upgrading existing facilities for the business, and equipment purchase or leasing.

Some of the benefits of the 504 Loan Program for funding commercial real estate include:

  • Low down payment 
  • Fixed rate for the SBA portion of the funding 
  • Long-term repayment 
  • Low-interest rates  

For small businesses interested in purchasing commercial real estate, the Small Business Association (SBA) offers the 504 Loan Program. Businesses in almost every industry can qualify for financing, which opens up opportunities typically only accessible to larger businesses. Not only does this program benefit small businesses seeking to achieve financial goals through purchasing commercial real estate, but it contributes to growing communities through the expansion of small businesses.