Owner-User Financing
SBA 504 Loans for Owner-Users in Colorado
An SBA 504 loan lets a small business buy or build the building it operates from with as little as 10% down and long-term fixed-rate financing on part of the debt. We help Colorado owner-users find the right building, run the numbers and work alongside your lender and CDC through closing.
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Who an SBA 504 Loan Fits
An SBA 504 loan fits an established, for-profit small business that wants to buy, build or improve the building it will occupy, or buy long-life equipment. It does not fit investors buying rental property, working capital needs or speculative projects. Your business generally needs to occupy at least 51% of an existing building, or 60% of new construction.
SBA 504 loan buyers come from many industries: medical and dental practices buying office condos, contractors buying shops, manufacturers buying industrial buildings and service companies buying flex space.
Steps to Buy a Building With an SBA 504 Loan
- Talk with a lender or Certified Development Company to confirm eligibility and budget.
- Run a lease vs. buy analysis so you know buying makes sense.
- Search, tour and underwrite buildings that fit your operation.
- Negotiate the purchase with financing and due diligence contingencies.
- Close the purchase with your bank and CDC, following the closing steps and timeline they set for the SBA 504 loan.
For official program rules, see the SBA 504 loan page. For help finding the building, see our owner-user acquisitions service.
How a 504 Loan Is Structured
A typical 504 project has three pieces. Here is a sample $2,000,000 building purchase, for illustration only:
| Source | Share | Sample amount |
|---|---|---|
| Bank or private lender (first lien) | 50% | $1,000,000 |
| CDC / SBA debenture (second lien) | 40% | $800,000 |
| Business owner down payment | 10% | $200,000 |
| Total project | 100% | $2,000,000 |
The owner’s share generally rises to 15% for a business under two years old or for a special-purpose property, and to 20% when both apply. Your business must occupy at least 51% of an existing building, or 60% of new construction.
Common Questions
What is an SBA 504 loan?
A long-term loan program from the U.S. Small Business Administration for buying, building or renovating owner-occupied commercial real estate and for long-life equipment. It is made through a Certified Development Company (CDC) working with a bank or other private lender.
How does an SBA 504 loan work?
A bank or private lender typically funds about 50% of the project with a first lien, a CDC funds up to 40% with an SBA-backed second lien, and the business puts in as little as 10%. The CDC portion carries a long-term fixed rate tied to U.S. Treasury rates at the time it is funded.
SBA 504 vs. 7(a): which fits buying a building?
Both can finance real estate. A 504 is built for fixed assets like buildings and long-life equipment and usually needs a lower down payment. A 7(a) is more flexible and can also cover working capital, inventory and business acquisition. Many owner-users buying a building start with a 504 and compare it against a 7(a) with their lender.
SBA 504 vs. a conventional commercial loan?
A conventional commercial mortgage usually requires a larger down payment and often has a shorter term or a balloon. A 504 can lower the cash needed to buy and fix the rate on the CDC portion for the long term. In exchange, there is more paperwork, an owner-occupancy requirement and SBA eligibility rules.
What is the maximum SBA 504 loan amount?
SBA lists the maximum for its portion of a 504 at up to $5 million for most projects and up to $5.5 million for certain manufacturing and energy-related projects. The bank portion is separate, so total projects can be larger. Confirm current limits with a CDC.
Are SBA 504 loans assumable?
An SBA 504 loan may be assumed by a qualified buyer, but only with approval from the CDC, SBA and the senior lender. The buyer has to meet the program’s eligibility and occupancy rules.
How do I buy a building for my business?
Start with your budget and space needs, then talk with a lender or CDC to confirm how much you can finance. From there, we search the market, compare buildings against leasing, negotiate the purchase and coordinate due diligence, appraisal, environmental review and closing with your lender.
Disclaimer: Sample numbers on this page are for illustration only. We do not publish current SBA 504 interest rates or fees. Rates, fees, loan limits and eligibility rules are set by SBA, CDCs and lenders and change over time. We are not a lender, and this page is not a loan offer or commitment, or tax, legal or financial advice. Confirm current terms with an SBA lender or Certified Development Company.