Ben's answer
SBA 504 Loan Down Payment: 10%, 15% or 20%?
How much down payment an SBA 504 loan needs in 2026: 10% for most projects, 15% for newer businesses or special-purpose buildings, 20% for both, per SBA rules.
- 10%Most SBA 504 projects need a down payment of at least 10% of the project cost.
- 15%That rises to at least 15% if your business has been operating for two years or less, or if the project is a limited or single-purpose building.
- 20%If both are true, the minimum is 20%.
- 50%A loan from a private-sector lender with a senior lien covering up to 50% of the project cost.
Most SBA 504 projects need a down payment of at least 10% of the project cost. That rises to at least 15% if your business has been operating for two years or less, or if the project is a limited or single-purpose building. If both are true, the minimum is 20%. These minimums come from SBA's rule on borrower contributions, 13 CFR 120.910.
Last checked: October 25, 2026. This page is general information, not tax, legal, or financial advice.
The short version
| At least 10% | the standard minimum, for an established business buying or building a general-purpose property or long-life equipment. |
|---|---|
| At least 15% | if the business has operated for two years or less. |
| At least 15% | if the project involves buying, building, converting or expanding a limited or single-purpose building or structure. |
| At least 20% | if both of the 15% conditions apply. |
These are minimums. A Certified Development Company (CDC) or the bank in your deal can ask for more.
How a 504 project is usually split
A 504 loan isn't one loan from one lender. SBA describes the typical project this way:
- A loan from a private-sector lender with a senior lien covering up to 50% of the project cost.
- A loan from a CDC, backed by a 100% SBA-guaranteed debenture, with a junior lien covering up to 40% of the total cost.
- A contribution from the borrower of at least 10% of the total project cost.
That 10% slice is the down payment people mean when they ask about 504 loans. When the rules require 15% or 20%, the borrower's share grows to match.
What the rule actually says
Under 13 CFR 120.910, the borrower has to contribute an amount equal to a set percentage of the project cost, excluding administrative costs:
- At least 15% if the borrower has operated for two years or less. If the borrower is a real estate holding company (an "Eligible Passive Company" in SBA's terms), the test looks at the operating company that will use the property.
- At least 15% if the project involves the acquisition, construction, conversion or expansion of a limited or single-purpose building or structure.
- At least 20% if both conditions apply.
- At least 10% in all other cases.
The rule doesn't list which buildings count as limited or single-purpose. If your property is built around one specific kind of business, ask your CDC early how it will be classified, because that can move your down payment from 10% to 15%.
What can count as your contribution
The rule says the contribution can be:
- Cash.
- Property acceptable to SBA that was obtained with cash.
- Land that is part of the project property.
So if you already own the land you plan to build on, it may count toward your share. Your CDC decides how much it's worth for the deal.
The contribution can come from the CDC or any other source, except an SBA business loan program. In other words, you can't use another SBA loan to cover your 504 down payment. SBA's rule points to a separate exception for SBICs (small business investment companies) in 13 CFR 120.913.
A quick illustration
These numbers are made up to show the math, not a quote:
For a $1,000,000 project (not counting administrative costs):
- An established business buying a general-purpose building would need at least $100,000 (10%).
- A business that has been open 18 months would need at least $150,000 (15%).
- That same 18-month-old business buying a limited or single-purpose building would need at least $200,000 (20%).
The lender and CDC loans make up the rest, within SBA's limits.
How big can a 504 loan be?
SBA's 504 loan page states: "The maximum loan amount for a 504 loan is $5.5 million." SBA's lender comparison table also lists CDC/504 loans at "$25,000 – $5.5 million." The banner at the top of the same 504 page still reads "up to $5 million," so confirm the current limit with your CDC before you plan around it. Because the CDC loan is usually about 40% of the project, the total project can be larger than the 504 loan itself.
What a 504 loan can pay for
Per SBA's 504 page, a 504 loan can be used for:
- Buying, building or renovating existing buildings or land.
- Long-term machinery and equipment with a remaining useful life of at least 10 years.
- Consolidating, repaying or refinancing debt that meets SBA's qualified-debt rules in 13 CFR 120.882.
It can't be used for working capital or inventory, for debt that doesn't meet those rules, or for speculation or investment in rental real estate. SBA offers 10-, 20- and 25-year maturities, and the rate is tied to an increment above the current market rate for 10-year U.S. Treasury issues.
Who qualifies
Who is eligible
- Operate for profit in the U.S.
- An operating business.
- Small under SBA size standards.
- Not be a type of ineligible business.
- Management expertise, a feasible business plan, good character.
- The ability to repay.
Doesn't qualify
- Businesses engaged in nonprofit, passive or speculative activities can't get 504 loans.
Is a 504 the right loan?
A 504 loan is built for owner-occupied property and long-life equipment. If you need working capital, inventory or money to buy a business, a 7(a) loan is usually the better match. For a side-by-side comparison, see our guide: how SBA 504 and 7a loans compare.
How to get it
How to get started
- 504 loans are available only through Certified Development Companies.
- SBA's 504 page has a tool to find a CDC near you, or you can contact your local SBA office.
- Bring your project cost estimate, how long the business has operated, and a description of the property so the CDC can tell you which down payment tier applies.
FAQ
Frequently asked questions
What is the minimum down payment for an SBA 504 loan?
At least 10% of the project cost for most projects. It's at least 15% if the business has operated for two years or less or the project is a limited or single-purpose building, and at least 20% if both apply (13 CFR 120.910).
Do startups pay a higher down payment on a 504 loan?
Yes. A business that has operated for two years or less must contribute at least 15%, or at least 20% if the project is also a limited or single-purpose building.
Can land I already own count toward my 504 down payment?
It can. SBA's rule allows land that is part of the project property to count as the borrower's contribution, along with cash or property acceptable to SBA bought with cash.
Can I use another SBA loan for the 504 down payment?
No. The contribution can come from the CDC or another source, but not from an SBA business loan program, with a limited exception for SBICs.
What is the maximum SBA 504 loan amount?
SBA's 504 page states, "The maximum loan amount for a 504 loan is $5.5 million," though the page's banner still says "up to $5 million." Confirm the current limit with your CDC.
Programs that may match
Look beyond the loan
Important: FundPlenty isn't a tax, legal or financial advisor, and this page isn't tax, legal or financial advice. Program rules change, so confirm terms with your CDC, your lender, or your CPA or another qualified professional before relying on anything here.