Hello — I'm Beau Eckstein, your Business Ownership Coach and host of the Investor Financing Podcast. In a recent update I shared that SBA 504 rates have dropped to roughly 6% on a 25-year debenture. That change opens up meaningful opportunities for entrepreneurs who want long-term, fixed-rate financing for owner-occupied commercial real estate. In this article I’ll walk you through why this rate move matters, how the SBA 504 program works, how it compares to other government-guaranteed options, and practical ways to structure deals — including pairing 504 with a companion 7(a). If you want personalized help, you can book a call at bookwithbeau.com.

Why the 6% SBA 504 Rate Matters Right Now

Dropping to about 6% on a 25-year debenture means the SBA 504 program now offers a fixed-rate alternative that can beat many traditional commercial loans. To put it plainly: you can lock in predictable payments for up to 25 years, often with a lower down payment and more favorable terms than conventional lenders. For small business owners who want to stop paying their landlord and start building equity, this is the kind of long-term stability that changes cash flow planning and growth trajectories.

As a Business Ownership Coach | Investor Financing Podcast host, I emphasize that the value here is not just the headline rate — it’s the combination of a long fixed term, manageable down payment (sometimes as low as 10%), and flexible uses including purchase, refinance, construction, and expansion.

Key Benefits of the SBA 504 Loan Program

The SBA 504 program is designed specifically to help small businesses acquire and improve owner-occupied commercial real estate. Benefits include:

• Long-term fixed rates for up to 25 years — excellent for budgeting and predictability.
• Low down payment requirements — often only 10% equity required from the borrower.
• Flexible use of funds — purchase, construction, expansion, and refinancing owner-occupied property are all eligible.
• Government-backed structure — the program is administered through Certified Development Companies (CDCs) and participating lenders, providing stability and reliability.
• Ability to pair with other SBA products — you can structure companion loans (like a 7(a)) to cover working capital or equipment.

These features align with the needs of entrepreneurs who want to protect working capital while investing in long-term real estate ownership. As someone who’s helped clients navigate dozens of these loans, I can tell you that the most successful borrowers prioritize the long-term predictability that the 504 program delivers.

How SBA 504 Compares to SBA 7(a) and USDA Loans

SBA 7(a) and SBA 504 are often compared because both support small business growth, but they serve different purposes:

• SBA 7(a): More flexible for general business purposes — working capital, equipment, inventory, and sometimes real estate. Interest rates can be variable or fixed; terms are shorter than 504 for real estate in many cases.
• SBA 504: Optimized for real estate and fixed asset financing with long-term fixed-rate debentures up to 25 years. Typically lower down payment for owner-occupied real estate and structured to build equity.
• USDA: Often targeted at rural businesses and can offer competitive terms or unique eligibility for projects in designated areas. Not always comparable in flexibility or availability for urban projects.

Which is “better” depends on your objective. If your primary goal is to buy or build owner-occupied commercial property and lock in a low fixed rate for decades, SBA 504 frequently wins. If you need working capital or wide-ranging flexibility, a 7(a) or a USDA product might be a good fit. Importantly, you can combine these — for example, pair a 504 debenture for the real estate with a companion 7(a) for working capital or tenant improvements. That pairing creates financing that covers the whole project while keeping monthly payments predictable.

Photo by FIN on Unsplash

Typical Use Cases: Buy, Build, Refinance, or Rent Replacement

Here are common scenarios where SBA 504 is especially effective:

1. Rent Replacement — Instead of renewing a lease, buy the building you occupy. Convert rent payments into mortgage payments that build equity.
2. Expansion to New Locations — Use the 504 to acquire additional owner-occupied properties, keeping more capital available while growing footprint.
3. Ground-Up Construction — 504 can finance new construction projects, allowing you to own purpose-built facilities rather than retrofit leased space.
4. Refinancing Owner-Occupied Real Estate — Refinance higher-rate debt into a 25-year fixed-rate 504 debenture for savings and stability.

Each of these options has nuances — eligibility, collateral requirements, and costs — but the fundamental advantage is straightforward: long-term, predictable financing that supports growth while preserving working capital.

Structuring Deals: Pairing 504 with Companion 7(a) and Other Strategies

One of the most powerful tools in my toolbox is structuring combined financing. A typical structure might look like this:

• CDC-backed 504 debenture covers the bulk of the real estate acquisition or construction cost at a fixed 25-year rate (currently ~6%).
• A bank or SBA 7(a) loan provides a first-lien portion or companion financing for working capital, equipment, or tenant improvements.
• Borrower equity contribution (often around 10%) aligns incentives and reduces overall loan-to-value.

This approach gives you the best of both worlds: a low fixed rate on the real estate plus flexible funds to manage growth and operations. As your Business Ownership Coach | Investor Financing Podcast host, I guide business owners through lender selection, deal packaging, and documentation so that approvals happen smoothly and efficiently.

Common Questions and Eligibility — Do You Qualify?

Common eligibility questions I get as a Business Ownership Coach | Investor Financing Podcast host include:

• What sizes of businesses qualify? SBA programs have size standards; most small businesses meet these thresholds. The CDC will help determine eligibility.
• Can I use the loan for existing debt? Yes — partial refinancing of owner-occupied real estate is allowed under certain conditions.
• How much down payment is required? Many 504 deals ask for about 10% down, though that can vary with the borrower’s industry and collateral.
• How long is the application process? Timelines vary, but good preparation and an experienced CDC or preferred lender can speed things up.

If you want a quick assessment, visit bookwithbeau.com to schedule time with me. I’ll help you evaluate whether 504, 7(a), USDA, or a combination is the optimal strategy for your situation.

Next Steps: How I Can Help You Get to the Finish Line

Financing markets are fragmented, and lenders each bring different strengths to the table. That’s why having a guide matters. I work with entrepreneurs to:

• Identify the right SBA product(s) for your needs — including pairing 504 with a companion 7(a) when appropriate.
• Select preferred lenders and CDC partners who understand your industry.
• Package the loan to highlight strengths — management experience, cash flow, and collateral — reducing friction during underwriting.
• Assist through closing and post-closing to help ensure successful occupancy or project completion.

The bottom line: if your goal is long-term stability and growth through owning your real estate or scaling into new locations, the current 504 rate environment makes it worth evaluating now.

Conclusion: Take Action While Rates are Favorable

Lower SBA 504 rates — right now about 6% for a 25-year debenture — present a rare chance to secure predictable, long-term financing that supports ownership, growth, and stability. As your Business Ownership Coach | Investor Financing Podcast host, I’m here to help you evaluate your options, structure the best deal, and find the right lending partners to get you to the finish line.

Want to explore whether you qualify or how to structure a companion 7(a)? Book a call at bookwithbeau.com or text (925) 940-4133. If you prefer to learn and grow with a community, consider joining the Business Ownership Academy or subscribing to my newsletter for ongoing insights.

Thanks for reading — and if you want the full walkthrough and a quick rate update, watch the short video below.