SBA 504 Loan: Maximum Amount, Rates, and How It Works in 2026

A manufacturing company in Ohio purchased a $2.4 million facility using an SBA 504 loan in early 2026. Their structure: $1.2 million from their conventional lender at a variable rate, $960,000 from the CDC at a fixed rate of approximately 6.9% for 25 years, and $240,000 from their own equity injection — exactly 10%. Their monthly payment on the full project is lower than renting equivalent space would have cost. That is the core promise of the 504 program: long-term, fixed-rate financing at below-market rates for businesses that want to own rather than lease the assets they depend on.

What the SBA 504 Program Is Designed For

The 504 loan program exists for a specific purpose: financing major fixed assets that promote business growth and job creation. It is not a general-purpose loan. If you need working capital, inventory financing, or funds to manage cash flow, the 504 is the wrong program — look at the 7(a) instead.

The 504 program is designed for:

• Purchase of owner-occupied commercial real estate
• Construction or renovation of commercial facilities
• Purchase of long-term machinery and equipment with a minimum useful remaining life of 10 years
• Certain debt refinancing that meets the SBA's definition of "qualified debt"
• AI-supported equipment or machinery for manufacturing products (added in recent SBA guidance)

It cannot be used for working capital, inventory, speculative real estate investment, or paying off existing debt that does not meet the qualified debt definition.

The Three-Party Structure: How 504 Financing Actually Works

The SBA 504 is structurally different from every other SBA loan. Instead of one lender, it involves three parties:

• Conventional lender (bank or credit union): Provides 50% of the total project cost at their own rate and terms. This portion is a standard commercial loan with no SBA involvement.
• Certified Development Company (CDC): Provides up to 40% of the project cost, funded through SBA-guaranteed debentures sold to investors. This is the portion that carries the fixed rate and long term.
• Borrower: Contributes a minimum of 10% equity injection. Startups or businesses purchasing single-purpose properties may be required to contribute 15% to 20%.

The CDC is a nonprofit organization certified and regulated by the SBA. You do not apply to the SBA directly — you work with a CDC in your area, which coordinates with both the SBA and your conventional lender. Find a CDC at sba.gov/partners/lenders/certified-development-companies.

Maximum Loan Amounts in 2026

The SBA 504 maximum amounts apply to the CDC/SBA-guaranteed debenture portion — not the total project cost:

• Standard maximum: $5 million per project for most businesses. This is also the total outstanding SBA-guaranteed exposure limit across both 504 and 7(a) programs combined for non-manufacturing businesses.
• Small manufacturers (NAICS 31–33): $5.5 million per project, with no aggregate cap — meaning manufacturers can have multiple 504 projects each up to $5.5 million simultaneously as long as each meets program requirements individually.
• Energy-related projects: Projects meeting specific public policy energy goals may also qualify for the $5.5 million limit.

Since the CDC portion is typically 40% of the total project cost, a $5 million CDC debenture supports a project of approximately $12.5 million total — with the conventional lender covering $6.25 million and the borrower contributing $1.25 million.

Current SBA 504 Interest Rates: April 2026

This is where the 504 program becomes particularly compelling. Unlike 7(a) loans tied to the variable Prime Rate, 504 rates are fixed for the life of the loan — 10, 20, or 25 years — and are based on current US Treasury yields plus a small spread of fees.

The effective rate on the CDC portion as of April 2026 is approximately 6.7% to 7.5%, depending on the term length and the specific debenture auction that month. These rates include:

• The 10-year US Treasury bond rate (the base)
• A CDC servicing fee
• An SBA guarantee fee
• A central servicing agent fee

Rates update monthly with each SBA debenture auction. The rate quoted when you close is the rate you pay for the entire term — no adjustments, no surprises. For comparison, the current SBA 7(a) maximum rate on loans over $350,000 is 9.75% variable. A 504 at 6.9% fixed over 25 years is materially different financing.

Your conventional lender sets their own rate on their 50% portion independently. The blended effective rate across the full project will be between the conventional rate and the CDC fixed rate.

Eligibility Requirements

To qualify for SBA 504 financing, your business must:

• Operate as a for-profit company in the United States
• Have a tangible net worth of less than $20 million — measured at the time of application
• Have an average net income of less than $6.5 million after federal income taxes for the two years preceding your application (updated from the prior $5 million threshold — verify current figure at sba.gov as this has changed)
• Meet SBA size standards for your industry
• Demonstrate job creation or retention: The standard requirement is one job created or retained for every $75,000 of CDC loan amount ($120,000 for small manufacturers). Some projects qualify under public policy goals without meeting the job requirement.
• Have qualified management and a feasible business plan
• Demonstrate creditworthiness and ability to repay

Personal credit score: most CDCs and conventional lenders want to see 680 or higher, though the CDC will work with you if other factors are strong. A lower score does not automatically disqualify you — contact the CDC directly and be transparent.

FY2026 Fees

The 504 program has multiple fees layered into the effective rate and at closing. The SBA charges a one-time guarantee fee of approximately 0.5% of the debenture amount, plus ongoing CDC and servicing fees that are factored into your quoted effective rate. Most closing costs — including the guarantee fee — can be rolled into the loan amount rather than paid upfront, which preserves your working capital.

The SBA is also waiving certain guarantee fees for small manufacturers (NAICS 31–33) in fiscal year 2026. Confirm your eligibility with your CDC before closing.

Four Actions to Take This Week

1. Confirm your project qualifies — the asset being purchased must be owner-occupied real estate or long-term equipment. Investment properties and working capital do not qualify. If in doubt, ask a CDC before investing application time.
2. Find a CDC in your area at sba.gov/partners/lenders/certified-development-companies — CDCs are nonprofit organisations that administer the 504 program locally and guide you through the full process at no separate fee.
3. Start your conventional lender conversation simultaneously — the CDC and your bank need to work together. A lender already familiar with 504 deals significantly speeds the process. Ask your CDC which conventional lenders they work with regularly.
4. Calculate your equity injection — minimum 10% of total project cost. Startups and single-purpose properties (funeral homes, car washes, hotels) typically require 15% to 20%. Know this number before you begin, as it determines how much working capital you retain post-closing.

Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or regulatory advice. SBA programme rules, rates, and eligibility criteria change frequently. Always verify current requirements with a CDC, SBA-approved lender, or at sba.gov before applying.

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