SBA 504 Benefits

Benefits to the Business Owner:

The SBA 504 Loan Program provides an opportunity for business owners to purchase commercial real estate and long-term equipment at reasonable rates and terms.

  • 10% down payment
    Small business owners receive up to 90% financing, allowing them to conserve valuable working capital. Start-up businesses and special purpose properties require additional down payment.
  • Low, fixed interest rates
    Businesses won’t have to worry about their rate going up during the 504 Loan, and the low rate makes ownership even more affordable.
  • Longer term of repayment means lower payments
    Payments are spread over 10 or 20 years so they are low on a 504 Loan. And because the bank’s loan is in first lien position, it is typically amortized over a longer term.
  • Ownership equity in real property
    Property owners can avoid the risk of ongoing lease payment increases and add possible tax advantages.
  • Collateral is limited
    With the 504 Loan, the only collateral is the commercial property or equipment that is financed by the loan, leaving other business and personal assets free of liens.

Benefits to the Lender and Broker:

The SBA 504 Loan Program provides an opportunity to strengthen the relationship with the business client.

  • Strong collateral position
    The bank is in first lien position with 50% loan-to-value, reducing its exposure and credit risk. Bank’s lower loan amount can also help when approaching legal lending limits.
  • Unlimited project size
    The 504 loan can be used for gap financing on a conventional loan when a business owner doesn’t want to sink valuable business cash in fixed assets.
  • Fast approval
    Lone Star staff will work with the borrower and banker from start to finish enabling most loans to close within 45 days.
  • Prequalification of your clients
    We can prequalify applicants, saving everyone time in determining which properties might be most appropriate.


  • Business owners keep more working capital in the business due to the favorable loan terms, down payment, and interest rate.
  • Sellers get funds faster, because of SBA’s faster approval time.
  • Brokers earn commissions quickly and close loans that might not have qualified for conventional financing.
  • Banks get a 50% LTV first lien on the building, typically resulting in a lower interest rate to the borrower.
  • Neighborhoods benefit from increased economic development and additional jobs.
  • Taxpayers are not affected as no tax dollars are used to fund the 504 Loan Program.