Business Loans for Construction

A 504 structure helps businesses build or expand facilities with predictable, long-term financing and manageable equity. The common 50-40-10 approach preserves working capital while aligning payments to the useful life of the asset. Everyone sees the same numbers early—sources, uses, and dates—so approvals don’t stall.

Small business owner using SBA 504 loan for commercial construction project

Benefits of an SBA 504 Construction Loan

A few features make 504 a strong fit for construction tied to your operations.

  • Lower equity through the typical 50-40-10 split coordinated with your bank partner.
  • Fixed-rate SBA 504 debenture options (10, 20, or 25 years) for predictable payments.
  • Eligible soft costs and site work can be included as part of a defined project budget.
  • A coordinated path from structure through servicing with one point of contact at 504 Capital.
Key benefits of using an SBA 504 loan for commercial construction

SBA 504 Construction Loan Requirements

Clear requirements keep the file moving and set expectations for timing and documentation.

  • Business type: for-profit U.S. small business that meets SBA size standards.
  • Use of space: property used primarily for the company’s operations; owner-occupancy thresholds vary by project type.
  • Equity and credit: documented equity source, acceptable credit, and a feasible budget with sources and uses.
  • Third-party reports include appraisal, environmental, title, survey, and any project-specific items (such as plans, specifications, and bids).
  • Contractor and permits: qualified general contractor and evidence of required permits or approvals.
  • Process control: early coordination on inspections, draws, and closeout so funding and conversion stay on schedule.

How a Construction Loan for your Small Business Can Help

504 funds fixed assets and the project costs needed to bring a facility into service. Typical uses include the items below when tied to an owner-occupied project.

  • Land acquisition and related site improvements.
  • Ground-up construction, building additions, and major renovations.
  • Interior build-out, code and life-safety upgrades, accessibility improvements, and utilities.
  • Architect and engineering, permits and fees, and other approved soft costs.
  • Eligible contingency within a defined budget and timeline.
How construction loans can help small businesses expand facilities

How to Purchase Property with an SBA 504 Loan

Buying land as part of a construction project is straightforward when the plan and timeline are clear. 504 Capital coordinates roles with your lender and keeps the steps simple.

  • Pre-qualify and structure your loan with your lending partner and 504 Capital.
  • Purchase contract, preliminary due diligence, and third-party orders.
  • Application submission, including financials, ownership details, plans, specifications, and bids.
  • SBA review and authorization of the 504 debenture.
  • Closing and construction with inspections and coordinated draws.
  • Transition to Owner-occupancy, funding, and ongoing servicing through 504 Capital.
Step-by-step guide to purchasing commercial property with an SBA 504 loan

Why Work With 504 Capital

Daily SBA 504 work, lender coordination, and in-house servicing keep construction projects on schedule. The team packages cleanly, aligns with your bank partner, and stays engaged after closing so payments, escrow items, and routine requests are handled in one place.

Call Now Check Eligibility

SBA 504 Construction Loan FAQs

Yes. Eligible construction uses include additions, major renovations, interior build-outs, code/life-safety upgrades, accessibility improvements, utilities, and related site work—so long as the facility is primarily used by the operating company.

The 50-40-10 framework applies in most cases: ~10% borrower equity, with higher equity possible for startups or special-use facilities. We’ll lock in equity sources up front and reflect them in the budget and draw plan.

We address contingency and inspection/draw mechanics at the start. If scope or costs change, we coordinate promptly with your bank and the SBA to evaluate sources/uses, adjust draws, and keep occupancy/funding on schedule. Early notice and clean documentation are key.