SBA 504 Loan Calculator | Payment Estimator & Complete Guide

Use our free SBA 504 loan calculator to estimate your monthly payments, see the split between your bank loan and CDC/SBA debenture, and understand total project costs.

*Estimated payments only. Actual payments may vary based on lender terms, fees, and current market rates.

What Is an SBA 504 Loan?

The SBA 504 loan program is one of the most powerful financing tools available to small businesses in America. Unlike the more flexible SBA 7(a) loan, the 504 program is specifically designed for major fixed asset purchases — primarily commercial real estate and heavy equipment.

What makes the 504 unique is its split financing structure. Instead of one lender providing the entire loan, the project cost is divided among three parties:

• First Mortgage (50%): A conventional bank or lender provides a first-position loan for up to 50% of the total project cost. This portion typically has a variable or fixed rate negotiated directly with the bank.
• Second Mortgage — CDC/SBA Debenture (40%): A Certified Development Company (CDC) provides a second-position loan backed by the SBA for up to 40% of the project. This portion features a below-market, fixed interest rate for the full term — one of the biggest advantages of the program.
• Borrower Equity (10%): You contribute a minimum 10% down payment. This can increase to 15% for new businesses (less than 2 years) or special-use properties, and 20% if both conditions apply.

Who Qualifies for an SBA 504 Loan?

To be eligible for an SBA 504 loan, your business must meet these requirements:

• Operate as a for-profit business in the United States
• Net worth under $15 million and average net income under $5 million after taxes for the prior two years
• Not be a passive or speculative business (e.g., no real estate investment properties for leasing to others)
• Occupy at least 51% of the property (for existing buildings) or 60% for new construction
• Meet SBA size standards for your industry
• Create or retain jobs — generally one job per $90,000 of SBA debenture (with exceptions for community development goals)
• Good personal credit — typically 680+ FICO score
• No recent bankruptcies, foreclosures, or tax liens

Important: Unlike SBA 7(a) loans, 504 loans cannot be used to buy a business (goodwill/acquisition financing), working capital, inventory, or franchise fees. They are strictly for fixed assets.

What Can You Use SBA 504 Loans For?

✅ Eligible Uses

• Commercial real estate purchase — office buildings, warehouses, retail space, manufacturing facilities
• Land and land improvements — including grading, landscaping, parking lots, utilities
• New construction — building a facility from the ground up
• Building renovation or modernization — major improvements to existing property
• Heavy equipment and machinery — with a useful life of at least 10 years
• Refinancing existing commercial debt — under the 504 Refinancing Program

❌ Not Eligible

• Working capital or operational expenses
• Inventory or supplies
• Business acquisitions (goodwill)
• Debt repayment (except qualifying refinancing)
• Rental/investment real estate

Current SBA 504 Loan Rates (February 2026)

One of the biggest advantages of the SBA 504 program is the fixed-rate CDC/SBA debenture. These rates are set monthly based on the current market rate of 5-year and 10-year U.S. Treasury notes, plus a spread.

Rates as of February 2026. CDC debenture rates are reset monthly at each debenture sale. The 10-Year Treasury is currently at approximately 4.30%. Actual effective rate includes SBA guarantee fee and CDC servicing fee (typically adding ~0.50% to the base rate).

SBA 504 Loan Amounts and Terms

SBA 504 Loan Fees

The 504 program has several fees that are typically financed into the loan:

• SBA Guarantee Fee: Approximately 0.50% of the SBA debenture amount
• CDC Processing Fee: Typically 1.5% of the debenture amount (can be financed)
• Funding Fee: 0.25% of the debenture
• Underwriting Fee: 0.40% of the debenture
• Ongoing CDC Servicing Fee: Approximately 0.625%–1.0% annually (included in your monthly payment)
• Third-Party Closing Costs: Appraisal, environmental review, title insurance, legal fees — typically $10,000–$30,000 depending on project size

Pro tip: While the upfront fees may seem high, the below-market fixed rate on 40% of your project often saves you tens of thousands of dollars over the loan term compared to conventional financing.

SBA 504 vs. SBA 7(a): Which Is Right for You?

The bottom line: If you’re buying commercial real estate for your business, the SBA 504 is almost always the better deal — lower rates, longer terms, and lower down payments. If you’re buying a business or need working capital, you need an SBA 7(a) loan.

Benefits of SBA 504 Loans

• Below-market fixed rates: The CDC/SBA portion (40% of your project) gets a fixed rate that’s typically 1-2% below conventional rates — locked in for 20 or 25 years
• Low down payment: Just 10% down versus 20-30% for conventional commercial real estate loans
• Long terms: Up to 25 years means lower monthly payments and better cash flow
• Preserve working capital: Lower down payment + lower monthly payments = more cash for operations
• Build equity: Own your property instead of paying rent that builds someone else’s wealth
• No balloon payments: Fully amortizing — no surprises at the end of the term
• Fixed-rate stability: The CDC portion won’t fluctuate with market rates, giving you predictable payments

The SBA 504 Loan Process: Step by Step

1. Find a CDC in your area: Certified Development Companies are community-based, nonprofit organizations that work with the SBA. There are about 260 CDCs nationwide.
2. Identify your project: Have a specific property or equipment purchase in mind with pricing.
3. Apply with both the bank and CDC: You’ll work simultaneously with a conventional lender (for the 50% first mortgage) and the CDC (for the 40% SBA debenture).
4. Submit your application package: Business plan, financial projections, personal financial statements, tax returns (3 years), and property details.
5. SBA authorization: The CDC submits your application to the SBA for approval. This typically takes 2-4 weeks.
6. Bank loan closes first: The conventional lender typically closes their portion first.
7. CDC debenture sale: The SBA debenture is funded at the next monthly debenture sale. Your fixed rate is locked at this point.
8. Final closing: All funds disbursed, you take ownership of your asset.

Timeline: The full process typically takes 60-90 days from application to funding, though complex projects can take longer.

SBA 504 Refinancing Program

The SBA 504 Refinancing Program allows eligible businesses to refinance existing conventional commercial real estate debt into a 504 loan structure. This can be especially valuable when:

• Your current loan has a balloon payment coming due
• You want to lock in a fixed rate on the SBA portion
• You want to lower your monthly payments with a longer term
• You need to extract equity for business expansion (limited)

To qualify for 504 refinancing, you must have been current on your existing loan for at least 12 months, the property must be at least 2 years old, and you must meet standard 504 eligibility requirements.

Frequently Asked Questions About SBA 504 Loans

How Our SBA 504 Calculator Works

Our calculator uses standard amortization formulas to estimate monthly payments for each portion of your SBA 504 loan:

• Bank First Mortgage (50%): Standard amortizing loan at the bank rate you input, over your chosen bank term.
• CDC/SBA Debenture (40%): Fixed-rate amortizing loan at the CDC rate, over your chosen CDC term (10, 20, or 25 years).
• Total Monthly Payment: The sum of both loan payments. Your down payment is paid upfront.

Note: Actual CDC/SBA rates include additional fees (servicing fee, guarantee fee) that may increase the effective rate by approximately 0.50%. Add ~0.50% to the base CDC rate for a more accurate estimate.

Last Updated: February 2026 | Written by the GoSBA Loans team | SBA 7(a) Calculator | Down Payment Calculator | Apply Now