CALL NOW! (757) 623-2691
Financing Special Purpose Properties with SBA 504 Loans | 504 Capital Corporation
Financing Special Purpose Properties with SBA 504 Loans
Financing Special Purpose Properties with SBA 504 Loans

Financing Special Purpose Properties with SBA 504 Loans

Financing Special Purpose Properties with SBA 504 Loans

The Small Business Administration (SBA) 504 Loan Program is widely celebrated for helping businesses acquire traditional spaces like offices, commercial condos, factories, and land. Yet, what many don’t realize is that this versatile program extends its benefits far beyond the conventional, supporting the financing of unique and special-purpose properties as well.

From amusement parks to wineries, the SBA 504 loan for commercial real estate wraps a wide array of specialty properties into its financial umbrella. This is particularly advantageous for those harder-to-finance assets that might otherwise require hefty collateral or a large down payment when seeking traditional loans. Continue reading for more insights from 504 Capital Corporation.

What Are Special Purpose Properties?

The SBA defines a special-purpose property as a limited market property with a unique physical design, special construction materials, or a layout that restricts its utility to the specific use for which it was built.

All SBA 504 Loans take the real estate or equipment as collateral.  The difference between “regular” properties and special-purpose properties is the equity injection.  Borrower injects 10% equity for regular & 15%  for Special Purposes.

Eligible special use properties:

  • Amusement parks
  • Auto service centers (with pits and in-ground lifts)
  • Bowling alleys
  • Car washes
  • Cemeteries
  • Clubhouses
  • Cold storage facilities (where more than 50% of the total square footage is equipped for refrigeration)
  • Dormitories
  • Farms and dairy facilities
  • Funeral homes with crematoriums
  • Gas stations
  • Golf courses
  • Hospitals, surgery centers, urgent care centers, and other specialty medical facilities
  • Hotels, motels, and other lodging facilities
  • Marinas
  • Mines
  • Museums
  • Nursing homes, including assisted living facilities
  • Oil wells
  • Quarries, including gravel pits
  • Railroads
  • Sanitary landfills
  • Sports arenas
  • Swimming pools
  • Tennis clubs
  • Theaters
  • Vineyards and wineries

Multi-use properties that qualify for as little as a 10% SBA 504 loan down payment:

  • Art galleries
  • Breweries and distilleries
  • Child or adult daycare facilities
  • Event centers
  • Film, radio, and recording studios
  • Laundromats and dry cleaners
  • Parking lots
  • Preschools and Montessori schools
  • Self-storage facilities
  • Tow yards
  • Wedding chapels

The SBA 504 Loan Advantage

The SBA 504 Loan Program, however, offers a compelling alternative. Known for its below-market, fixed interest rates and long repayment terms, the 504 Program caters specifically to small and medium-sized businesses looking to invest in their operational growth through property acquisition or improvements.

One of the most appealing features of SBA 504 loans is a special purpose property, which is slightly adjusted for special use to a 50/35/15 split. This means the commercial lending partner’s first mortgage must cover at least 50% of the project cost, the SBA covers up to 35%, and the borrower contributes a minimum of 15%. This is particularly advantageous compared to conventional loans, which might demand upwards of 30% down.

Request Assistance from a 504 Capital Corporation SBA Professional

Financing Terms and Rates

With repayment terms extending up to 25 years and financing amounts reaching up to $5.5 million for specific projects, the SBA 504 loans for special-purpose properties are engineered to provide stability and affordability to borrowers. As of May 2024, fixed interest rates are competitive, with a 25-year Fixed Rate Standard sitting at 6.55%, demonstrating the program’s continued success in nurturing business expansion and economic development.

For more information on financing your special purpose property with SBA 504 loans, contact a 504 Capital Corporation SBA officer. Whether it’s an SBA loan for a commercial property or an SBA loan for a special-use property, exploring your options can unlock endless benefits for your business’s growth and success.

Connect with a 504 Capital Corporation SBA expert

Apply Now