SBA Loans for
Commercial Real Estate

The SBA 504 program is the most powerful tool available for small business owners purchasing or constructing commercial real estate. The structure works as follows:

• 50% of project cost: conventional first mortgage from a bank or credit union at market terms
• 40% of project cost: below-market fixed-rate loan from an SBA-approved Certified Development Company (CDC), guaranteed by the SBA
• 10% equity contribution from the borrower (vs. 20–30% required by conventional lenders)

504 loans can be used for purchase, construction, or renovation of owner-occupied commercial property. Loan amounts reach up to $15 million for standard projects, with 25-year amortization on real estate and fixed rates tied to 10-year U.S. Treasury yields — well below most conventional CRE loans.

The SBA 7(a) program is the SBA's broadest small business loan and can be used for commercial real estate as well as working capital, equipment, and business acquisition. Key terms for real estate financing:

• Maximum loan amount: $5 million
• Terms: up to 25 years for real estate
• Rates: floating, capped at Prime + 2.75% for loans over $50,000
• Down payment: typically 10% for real estate

7(a) is a better fit than 504 when the borrower also needs working capital alongside the real estate financing, or when the project doesn't meet 504 eligibility requirements.

To use SBA financing for commercial real estate, your business must occupy at least 51% of the property (existing buildings) or 60% (new construction). Additional eligibility requirements include:

• Business must meet SBA size standards (varies by industry)
• Tangible net worth below $15 million and average net income after taxes below $5 million
• Business must be for-profit and legally operating in the United States
• Borrower must demonstrate inability to obtain conventional financing on reasonable terms (504 requirement)

SBA loan terms, fees, and lender experience vary significantly. Not all SBA lenders are created equal — processing speed, familiarity with your industry, and local market knowledge matter. Gumption connects you with multiple SBA lenders simultaneously, so you can compare:

• SBA 504 vs. 7(a) fit for your specific project and business profile
• Conventional vs. SBA alternatives side by side
• Lender experience with your asset type and geography
• CDC partner relationships that affect 504 closing timelines

Our dedicated advisors can walk you through the SBA process, help you determine which program fits your situation, and ensure your deal is packaged to attract the most competitive SBA quotes.