SBA 504 finances owner occupied real estate and long life equipment through two loans at once: a bank first mortgage and a fixed rate debenture from a certified development company, with the borrower contributing equity.
Approximate 2026 cost
Blended cost of about 7 to 8 percent
Approximate 2026 blended effective rate across both pieces. Individual deals vary.
Debenture terms of ten, twenty or twenty five years, with the bank piece often ten years.
Educational estimates only. This page is general information, not financial advice. Cost of Financing does not offer, broker or arrange loans, and we accept no lender sponsorships, referral fees or lead payments.
How SBA 504 is priced
The structure is usually about fifty percent bank loan, forty percent debenture and ten percent borrower equity, with more equity required for special purpose property or newer businesses. The bank piece is priced conventionally. The debenture piece is fixed at issue and tied to treasury pricing plus program fees.
The blended cost is a weighted average of the two rates. Because the debenture is long and fixed, the blend is usually more stable than a single variable bank loan, which is the main financial attraction of the program.
Fees include a debenture processing fee, a CDC servicing fee, a central servicing agent fee and ordinary closing costs. Most can be financed into the debenture, which raises the amount owed while reducing cash at closing.
Typical 2026 cost range
For 2026 we estimate a blended effective cost of roughly 7 to 8 percent for typical deals. That is close to conventional bank pricing while requiring less equity and locking a long fixed rate on the larger half of the structure.
Compare it directly against SBA 7(a) on the same purchase. For real estate, 504 often wins on rate stability. For mixed use of funds including working capital, 7(a) is usually the only option.
What moves you within the range
Treasury pricing at the month your debenture funds sets the fixed piece and is outside your control. The bank half moves with your credit profile, the property type and how much equity you contribute.
Special purpose properties such as hotels, restaurants and car washes require more equity and usually price higher on the bank half than a plain warehouse or office building.
When SBA 504 makes sense
It fits buying the building you operate from, or a large long life machine, when you want a long fixed rate and want to preserve cash by contributing only around ten percent.
It fits poorly for working capital, inventory or debt refinancing outside the narrow eligible cases, and it fits poorly when you need to move in weeks rather than months.
Before you sign
Ask the CDC for the blended rate across both pieces, not the debenture rate alone
Confirm the equity requirement for your property type early
Model the closing timeline honestly, since the process is slower than conventional finance
Educational estimates only. This page is general information, not financial advice. Cost of Financing does not offer, broker or arrange loans, and we accept no lender sponsorships, referral fees or lead payments.