Understanding the Power of SBA 504 Loans
For business owners looking to purchase, build, or renovate commercial real estate, or purchase equipment the SBA 504 loan program represents one of the most advantageous financing options available.
With up to 90% financing possible (100% in some cases), these loans can dramatically reduce the amount of capital you need to put down, making commercial property ownership accessible to more businesses.
At New England Certified, we've helped thousands of New England businesses access this powerful financing tool.
Let's explore exactly what makes you eligible and how you can maximize your chances of approval.
Key Eligibility Requirements for 90% SBA 504 Financing
To qualify for up to 90% financing on commercial real estate through the SBA 504 program, your business must meet these primary criteria:
- Business Type and Size: Your business must be for-profit and meet SBA size standards, with a tangible net worth less than $20 million and average net income below $6.5 million (after federal taxes) for the two years preceding your application
- Occupancy Requirement: For existing buildings, you must occupy at least 51% of the property. For new construction, you need to occupy at least 60%
- Project Eligibility: Funds can be used for purchasing land and buildings, construction, renovations, equipment or even refinancing existing eligible debt
- Management Experience: You need to demonstrate qualified management expertise and a feasible business plan
- Repayment Ability: Your business must show the capacity to repay the loan from operational cash flow
Financing Structure: How the 90% Works
The SBA 504 loan utilizes a unique three-part structure:
- First Mortgage (50%): Typically provided by a commercial lender (bank or credit union)
- SBA Portion (40%): Funded through a Certified Development Company (CDC) like New England Certified
- Borrower's Down Payment (10%): Your equity contribution
This structure allows for the 90% financing that makes these loans so attractive. In some cases, such as for start-ups or special-purpose properties, the equity requirement may increase to 15%. 20% if the business is special purpose and a start-up.
Recent Program Enhancements You Should Know About
Recent updates to the SBA 504 program have made it even more flexible:
- Extended Terms: Fixed-rate financing available for up to 25 years on real estate
- Fixed rates of 10,20 or 25 years. Usually below market.
- Refinancing Options: Expanded ability to refinance existing debt, with or without expansion
- Equipment Financing: 10-year terms available for major equipment purchases
How New England Certified Simplifies the Process
As the oldest business development corporation in the United States, BDC Capital/New England Certified brings unique advantages to your SBA 504 loan application:
- Premier Certified Lending Company: We can unilaterally approve SBA 504 loans, streamlining the approval process
- Combined Financing Solutions: Unlike most competitors, we can provide down payment financing alongside your 504 loan
- Experience: With over 70 years in business and more than $2.3 billion invested in New England businesses, we understand your local market
Next Steps: Starting Your Application
Ready to explore whether an SBA 504 loan is right for your business? The process begins with a conversation. Contact our team at 781-928-1100 or visit www.cdcnewengland.com to learn more.
We'll evaluate your business's eligibility, help structure the optimal financing package, and guide you through every step of the application process.
With today's commercial real estate market, securing up to 90% financing could be the strategic advantage your business needs to grow and thrive in 2025 and beyond.
