SBA 504 Loan: What It Is and How to Get One

An SBA 504 Loan is a financing program specifically designed for small businesses. These loans help small businesses acquire or improve major assets like real estate, buildings, or equipment in order to promote growth and job creation.

The unique thing about these loans is that they are backed by the U.S. Small Business Administration (SBA). They do not directly issue the loans, but partner with lenders who do. Because the loans are backed by the government, this allows the lenders to offer more favorable terms -like lower interest rates and longer repayment periods- to borrowers because the risk is minimized.

Below we outline the key features and qualifiers for an SBA Loan and how to get one.

Features of an SBA 504 Loan (as of April 2025)

• Loan Amount: Up to $5.5 million
• Uses: Purchase land, buildings, and long-term equipment, fund new construction, and expand or modernize existing facilities and properties
• Repayment Terms: 10, 20, or 25 years depending on the asset being financed
• Interest Rates: 504 Loans are fixed-rate loans. Competitive rates are capped by the SBA, so these loans are often more affordable than a conventional business loan.
• Down Payment: At least 10% down
• Processing Time: As with all loans, time frames vary. But the beauty of working with an SBA Preferred Lender is that we do this day in and day out. We know all the right questions to ask to streamline the process and make sure you’re compliant with all requirements from the start.

How to Get an SBA 504 Loan

1. Qualify:

• Be a for-profit and owner-occupied business in the U.S. or its territories.
• Have a net worth of less than $20 million and an average net income under $6.5 million after taxes for two years preceding your application.
• You as the business owner must demonstrate good character, management experience, and the ability to repay the loan based on cash flow projections.
• The loan project must meet job creation goals or public policy objectives.

2. Apply:

• Gather all the necessary documents. This includes tax returns, personal financial statements, interim financials, purchase agreements, and your business plan.
• Schedule an appointment with our dedicated SBA department so we can walk you through the loan application process. With you, we’ll determine loan amount, repayment terms, and use of funds.

3. Approval:

• Your loan application is reviewed and decided on locally. We process your application, ensure eligibility, perform a credit assessment, and underwrite your loan all in-house.

4. Closing:

• Once approved, you are notified, and we finalize your loan terms.
• Closing agreements are signed and funds are disbursed.

The structure of the SBA 504 Loan balances the risk between lenders, borrowers, and the government, which allows lenders to offer more accessible capital for those that might not qualify for other avenues of financing. When you come to Texas First Bank for an SBA Loan, you can be confident that you’re working with industry experts who can guide you through each next step of the loan process.

What does it mean to get a small business loan from an SBA Preferred Lender?

As an SBA Preferred Lender, we have been given the authority to make final credit decisions and approve loans on behalf of the SBA. We handle loan application and approval in-house and don’t have to send your application off to the SBA for a decision. The result is a smoother and shorter process for you and your business.

Loans subject to approval.