# SBA 504 loan

The SBA program for real estate and heavy equipment, not the business.

If the deal comes with real estate, the 504 and [7(a)](https://searchspheresource.com/glossary/sba-7a) pairing can change the whole structure: the 504 carries the property at a fixed rate over a term of up to 25 years while the 7(a) covers the business and [goodwill](https://searchspheresource.com/glossary/goodwill). Splitting the financing this way often lowers the blended rate and frees 7(a) capacity, so it is worth pricing whenever a building is part of the purchase. Since July 2026 a 7(a) balance no longer counts against the 504's own limit, so the pair can reach $10 million of SBA-backed financing on one project. The 504 cannot finance goodwill, so it never buys the business alone, and in a purchase it needs jobs kept or created, the buyer owning all of the business, and the seller gone as an officer, director, stockholder or key employee.

In numbers: A $1.5M owner-occupied building under 504 commonly splits 50% bank first mortgage, 40% CDC debenture, and 10% borrower equity ($150k), with the debenture at a long fixed rate; the operating business is financed separately, often under 7(a).

Source: https://searchspheresource.com/glossary/sba-504
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