The U.S. Small Business Administration closed fiscal year 2025 with the highest level of 504 loan activity in the program's history. Nationwide, 6,750 SBA 504 loans were approved for a total of $7.8 billion, representing a 13% increase in loan approvals and a 17% increase in dollar volume compared to the previous year.
For New England businesses, the news is even more significant. Our region led the country with 33% growth in 504 loan dollars, outpacing every other region in the nation.
What the Record Numbers Mean
The surge in 504 lending reflects growing confidence among small business owners who are ready to invest in commercial real estate and major equipment. After years of economic uncertainty, businesses across the country are expanding, upgrading facilities, and positioning themselves for long-term growth.
The 504 program's appeal is straightforward: it allows qualifying businesses to purchase commercial property or equipment with just 10% down, fixed interest rates for up to 25 years, and no balloon payments. For businesses that have been leasing space or delaying capital investments, these terms make ownership achievable.
The record-breaking year also demonstrates the program's effectiveness as an economic development tool. Every 504 loan finances fixed assets that support job creation and business growth. When multiplied across thousands of transactions nationwide, the impact on local economies is substantial.
New England Leads the Nation
New England's 33% growth in 504 loan dollars is the highest of any region in the country. This outperformance reflects several factors working in the region's favor:
Strong underlying economy. New England's concentration of healthcare, biotechnology, advanced manufacturing, education, and professional services creates steady demand for commercial space and specialized facilities.
Business owners ready to invest. Many New England companies delayed expansion plans during recent years of uncertainty. With greater economic clarity, those projects are moving forward.
Awareness of the program's benefits. As more businesses in the region successfully use 504 financing, word spreads. Business owners talk to other business owners, and lenders increasingly recommend the program to qualified borrowers.
Active CDC network. Certified Development Companies across New England have been working to connect businesses with financing opportunities. The region's CDCs processed a significant share of the national growth.
What This Means Going Forward
Fiscal year 2026 is shaping up to be another strong year for 504 lending. The combination of stabilizing interest rates, continued business investment, and growing familiarity with the program suggests sustained demand.
New England Certified Development Corporation expects to approve more than $100 million in 504 loans during the current fiscal year. When combined with the bank financing that accompanies each 504 loan, this translates to approximately $125 million in total project financing flowing to New England businesses.
These loans will fund new facilities, property acquisitions, equipment purchases, and expansions across Connecticut, Massachusetts, New Hampshire, Rhode Island, and Vermont. The ripple effects extend beyond the businesses themselves. Construction projects create work for contractors. New facilities require furnishings, equipment, and services. Expanded operations mean additional hiring.
Why Businesses Are Choosing 504 Loans
The record lending activity reflects the program's core advantages, which become even more valuable in a higher interest rate environment:
Lower down payments preserve working capital. At 10% down for most projects, business owners keep more cash available for operations, inventory, and growth initiatives. Conventional commercial loans typically require 20% to 30% down.
Fixed rates provide certainty. The SBA portion of the financing locks in a fixed rate for 10, 20, or 25 years. This protects borrowers from future rate increases and makes long-term financial planning more reliable.
No balloon payments eliminate refinancing risk. Many conventional commercial mortgages require a large lump-sum payment after 5 to 10 years, forcing borrowers to refinance at whatever rates are available. SBA 504 loans amortize fully over the term.
Below-market rates reduce costs. The SBA-backed portion of the loan typically carries rates lower than conventional commercial financing, reducing the overall cost of borrowing.
The program supports growth. Because 504 loans are designed for fixed assets that promote business expansion and job creation, they align with what growing businesses actually need.
Who Can Use the Program
The SBA 504 loan program is available to for-profit businesses that meet the following criteria:
- Tangible net worth of less than $20 million
- Average net income of less than $6.5 million after federal income taxes for the two years preceding the application
- Meet SBA size standards for your industry
- Plan to occupy at least 51% of an existing building or 60% of new construction
Most small to mid-sized businesses in New England meet these thresholds. The program covers a wide range of industries including manufacturing, healthcare, professional services, retail, hospitality, and more.
Eligible Uses
SBA 504 loans can finance:
- Purchase of existing commercial buildings
- Land acquisition and new construction
- Renovations and facility improvements
- Long-term machinery and equipment with a useful life of at least 10 years
- Refinancing of existing commercial real estate debt under certain conditions
The program cannot be used for working capital, inventory, or speculative real estate investment.
How to Get Started
SBA 504 loans are available exclusively through Certified Development Companies (CDCs). These nonprofit organizations are certified by the SBA to deliver the program and work with participating banks to structure the complete financing package.
For New England businesses interested in exploring 504 financing, New England Certified Development Corporation has been helping companies access the program since 1981. With more than $2.3 billion invested in over 8,300 New England businesses, they understand the local market and can guide you through the entire process.
Whether you're considering purchasing commercial property, building a new facility, acquiring equipment, or refinancing existing debt, the first step is a conversation about your project and your business. Most CDCs offer free initial consultations to evaluate eligibility and discuss options.
You can reach New England Certified at (781) 928-1100 or visit cdcnewengland.com to learn more.
The Bigger Picture
The record year for 504 lending reflects a broader trend: small businesses are investing in their futures. After years of navigating uncertainty, business owners are making the capital investments that support long-term growth and stability.
For New England, leading the nation in 504 loan growth is a positive signal about the region's economic trajectory. The businesses accessing this financing are building facilities, installing equipment, and creating jobs that will benefit their communities for years to come.
If you've been considering a commercial real estate purchase, facility expansion, or major equipment acquisition, the record-breaking demand for 504 loans suggests you're not alone. Many of your peers across New England are reaching the same conclusion: now is the time to invest.
This article is for informational purposes only. Contact a Certified Development Company or visit sba.gov for current program details and eligibility requirements.
