SBA 504 Loans

Long-term, fixed rate financing that promotes small business growth.
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What are SBA 504 Loans?

SBA 504 Loans are long term, government backed financing options that support real estate development and small business growth. Unlike commercial loans, SBA 504 loans can finance up to 90% of total project costs. These loans are available through Certified Development Companies (CDCs), who partner with the Small Business Administration (SBA) to promote economic development, business growth, and job creation.

How are SBA 504 Loans Structured?

SBA 504 loans are considered structured financing packages, which CDCs submit directly to the SBA for approval. Each SBA 504 loan package is comprised of three funding sources.


Financing through a bank or credit union.

A first loan for 50% of the project cost is placed through a third-party lender.


SBA financing

The SBA-backed portion of the loan acts as a second mortgage, financing up to 40% of eligible project costs (up to $5 million)


Owner Contribution

The owner places a down-payment of approximately 10% of total costs.

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Why Use a Bridge Loan for SBA 504 Loans?

The SBA’s 40% portion of the loan does not fund until a few months after the acquisition or the completion of construction on the property. That means either the Lender or the Borrower has to cover the gap. A Lincoln Capital bridge loan keeps the lender in a 50% 1st lien position and keeps the borrower’s equity contribution at 10%.

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Benefits for Lenders

Lender benefits for SBA 504 loans include:

  • 1st Lien position for banks, 2nd Lien position for SBAs.
  • Low Loan-to-Value strengthens loans portfolios.
  • Minimal equity injection enables lenders to compete for more business.
  • CRA credit is available.

Benefits for Borrowers

SBA 504 loans offer a wealth of benefits for borrowers, including:

  • Receive up to 40% of their project at a fixed rate over 10-20 year term ($5 million limit).
  • Significantly lower down payments (usually 10-20% of total costs).
  • Increased available capital.
  • Debt refinancing is available in expansion projects.

Frequently Asked Questions

Each project has different needs, and Lincoln Capital works to craft a solution that provides exceptional value to our lending partners. Lincoln Capital can provide our loan funds at the start of a project, or we can be the last dollars in.

Our tailored lending solutions help our lending partners reduce risk by lowering their loan-to-values, limiting exposure to certain asset classes, keep their current customers by reducing internal lending limit issues, and more.

Along with typical hard costs like land, building, and construction costs, we can include several soft costs including interest reserves, professional fees, closing costs, and fees.

Our pricing varies from project to project based on a multitude of lending elements. For an accurate quote for your project, reach out to one of our loan officers today.

Let’s Connect

Interested in learning more about the bridge lending solutions for SBA 504 loans? Fill out this form to learn about Lincoln Capital’s team or contact us at (214) 379-0655.

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