Calculate the unique 50/40/10 funding structure for commercial real estate or heavy equipment projects.
Startups and special purpose properties require a higher down payment.
The SBA 504 loan program is specifically designed for major fixed assets, like buying commercial real estate, constructing new facilities, or purchasing heavy machinery. Unlike the 7(a) program, the 504 program has a highly unique funding structure involving three parties: the borrower, a traditional bank, and a Certified Development Company (CDC).
Enter your total project costs (purchase price plus any planned renovations). Then, select your business profile. The calculator will automatically split the project into the standard 50/40/10 structure, adjusting the required equity if you are a startup or buying a special purpose property.
In a standard 504 loan, a traditional bank provides a loan for 50% of the project cost (taking the 1st lien position). A CDC, backed by the SBA, provides a loan for 40% of the project cost (taking the 2nd lien). The borrower provides the remaining 10% as a cash down payment.
If your business has been in operation for less than two years (a startup), the SBA requires you to put down 15%. If you are buying a "Special Purpose Property" (like a gas station, car wash, or hotel that is hard to convert to another use), you must also put down 15%. If you are a startup AND buying a special purpose property, you must put down 20%.
Yes. The CDC/SBA portion of the loan (the 40% chunk) comes with a declining prepayment penalty for the first half of the loan term. For a standard 20-year real estate loan, the penalty starts at 100% of one year's interest in Year 1, and drops by 10% each year until it disappears in Year 11. The bank's 50% portion will have its own separately negotiated prepayment penalty.