By: Brandon Berger | Director of Business Finance

What is the SBA 504 Loan program, and how can one utilize it? 

Well if you are a small business owner looking to acquire, construct or renovate a commercial building for your business, this is a loan program you should know about! Not only can it be used for commercial real estate, but also for many types of large equipment purchases. The SBA 504 Loan is an excellent financing option available to small business owners looking to grow and expand. There are several benefits to utilizing this program as part of one’s financing package.

 First, a quick lesson in the financing structure. There is a certain number combination to keep in mind when it comes to discussing the SBA 504 Loan program, and that is 50/40/10. What is behind these three numbers? It is the financing structure when one uses this program.

 50 – This represents the portion of the financing package provided by a commercial lending institution. 50% of the total project.

40 – This represents the portion of the financing provided by the SBA 504 Loan. 40% of the total project.

10 – This represents the borrower’s portion of the financing. 10% of the total project. This is the typical financing combination, but at times could change a bit to 50/35/15 or 50/30/20.

               Now that we know a bit about the structure,                 what are the benefits you ask? 

Here are some of the key benefits…

  • Low Down Payment – In most cases, a borrower can acquire their commercial real estate or equipment with as little as 10% down! This allows the business owner the ability to conserve their cash for other purposes as their business grows.
  •  Long-Term, Fixed Rate – We demonstrated above that SBA’s portion of the financing is typically 40%. SBA’s note, the 40%, will be structured on a 20- or 25-year amortization for real estate. The benefit is this note will have a fixed rate for the term of the loan! And historically, this interest rate has been below market! What more could one ask for than a portion of their financing with a below-market, fixed rate for 20 or 25 years!!!
  •  Provides a borrower with access to capital they may not be able to obtain completely through traditional commercial lending channels. Reduces the risk to lenders thus helping them to provide financing where they may not have been able to.
  •  The opportunity to work with the professional staff at Big Sky Finance! We have a very experienced team providing SBA 504 Loans across the entire state of Montana!


The SBA 504 Loan program may not be for everyone. But if you are a small business looking to expand or acquire commercial real estate and/or equipment for your business operations, consider it as an excellent financing option!

Learn more & connect with us today!


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