General 504 Loan Questions
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A 504 loan helps you buy commercial real estate, construct or renovate a facility, or purchase major equipment. It comes with a low down payment, a fixed rate, and a long repayment term.
It depends on your project and eligibility, but 504 loans can go well beyond what a conventional loan typically allows.
Purchasing commercial real estate, constructing or renovating a facility, buying heavy equipment, or refinancing eligible existing debt.
Working capital, inventory, or day-to-day operating expenses. That's what a 7(a) loan is designed for.
It varies by project, but most straightforward purchases move through underwriting, SBA approval, and closing within a matter of months. We'll give you a realistic timeline once we understand your specific project.
No. A strong credit profile helps, but we look at the whole picture — your business plan, your financials, and your project, not just a single number.
Questions from Business Owners
As little as 10% in most cases, though startups and single-purpose properties (like a gas station or hotel) may require more.
No. Your 504 portion is fixed for the life of the loan. No surprises, no adjustments.
Yes. Many business owners do, often because they're expanding to a new location or taking on a new venture.
Personal credit information, a personal financial statement, 2-3 years of business and personal tax returns, current financials, a business debt schedule, and a business plan or executive summary. We'll walk you through the full list.
We help you package everything for underwriting, work directly with the SBA on your behalf, and keep you updated at every step through closing.
Questions from Lenders
Your bank typically finances 50% of the project, we finance up to 40% (backed by the SBA), and the borrower contributes the remaining 10-20%.
You free up capital for other lending, reduce your risk exposure on large projects, and can offer your clients better terms than you could through a conventional loan alone — all while keeping the full banking relationship.
Most straightforward purchases close within 45-60 days; construction projects typically take a bit longer, closing 60-90 days after construction completion.
We do. We package the loan, submit it to the SBA, and manage that relationship directly, so your team can stay focused on your client.
Glossary
Plain-language definitions of common terms you'll encounter.
- CDC (Certified Development Company): A nonprofit organization certified by the SBA to provide 504 loans. Birmingham City Wide is a CDC.
- Debenture: The bond sold to fund the CDC's portion of a 504 loan. It's backed by the SBA and sold to investors, which is part of what allows 504 loans to offer such competitive, fixed rates.
- SBA 504 Loan: A loan program designed to help business owners purchase real estate or major equipment, with a low down payment and a long-term, fixed rate.
- SBA 7(a) Loan: A more flexible SBA loan program, typically used for working capital, inventory, or other operating needs — separate from what a 504 loan covers.
- Amortization: The schedule by which your loan is paid down over time through regular payments of principal and interest.
- Debenture Rate: The fixed interest rate set when your 504 loan's debenture is sold, locked in for the life of the loan.
- Owner-Occupied Property: A property where the business itself occupies a required percentage of the space (51% for existing buildings, 60% for new construction) — a key 504 eligibility requirement.
- Personal Financial Statement (PFS): A personal balance sheet listing your personal assets and liabilities, used by lenders to assess your financial strength.
- Personal Guarantee: A borrower's commitment to personally repay the loan if the business itself is unable to.
- Underwriting: The process a lender uses to evaluate a loan application, assess risk, and determine terms.
