SBA loan for commercial real estate

For owner-occupied commercial property, the SBA is often the cheapest money available — long terms, low down, and on 504 a fixed rate most banks cannot match.

Short answer. You can buy owner-occupied commercial real estate with either program. 504 gives a fixed rate for up to 25 years and usually 10% down — ideal for a building. 7(a) does it in a single loan with more flexibility. Either way you must occupy at least 51% of an existing building (60% for new construction).

The owner-occupancy rule

SBA real-estate loans are for owner-occupied property, not investment. You must occupy at least 51% of an existing building (or 60% of new construction), which is what separates SBA financing from a conventional investment mortgage.

504 vs 7(a) for property

504 splits the deal into a bank first mortgage and a fixed-rate CDC second, giving a long fixed rate and typically 10% down — the standard choice for a building purchase. 7(a) funds it in one usually-variable loan with more flexibility. Weigh them on your numbers in the 7(a)-vs-504 guide.

Terms, down payment and costs

Real-estate terms run up to 25 years, which keeps payments low. Down payment is generally 10% (more for a startup or special-purpose property). Budget for an appraisal and environmental review; see closing costs.

7(a) vs 504 comparison

See 7(a) and 504 side by side on payment, down payment and rate for your property.

Compare programs on your deal →

What the 504 record shows

our data

The 504 program financed $74B of SBA seconds since 2010 alongside $99B in bank first mortgages, and its recent vintages default at barely 1%. Find the CDCs active in your state and compare the two programs below.

Common questions

Can I buy commercial property with an SBA loan?

Yes, if you occupy at least 51% of an existing building (60% for new construction). Both 7(a) and 504 do owner-occupied real estate.

Is 504 or 7(a) better for real estate?

504 is the usual choice for a building — a fixed rate for up to 25 years and 10% down. 7(a) does it in one flexible loan. Compare on your numbers.

How much down for commercial real estate?

Generally 10%, rising to 15–20% for a startup or special-purpose property like a hotel or gas station.

Keep going

7(a) vs 504 calculator Find a CDC How 504 works Guide: 7(a) vs 504 Guide: down payment Glossary: appraisal

Rules described here follow SBA SOP 50 10 8 (effective June 1, 2025) and can change; lenders add their own overlays. This is education, not advice — confirm specifics with your lender. Figures cited as “our data” come from the SBA 7(a) & 504 FOIA record, released 2026-06-30.