Guide
How to buy a commercial condo with an SBA 504 loan
Down payments, who qualifies, how the loan is structured, and what the payment looks like on a real suite in Tega Cay.
By Kuester Commercial · Updated November 2, 2026
The SBA 504 loan is the most common way small businesses buy their own building or commercial condo. It needs as little as 10% down, locks in a long fixed rate on part of the loan, and lets your monthly payment build equity instead of paying a landlord.
How a 504 loan is structured
A 504 loan is really two loans plus your down payment. A bank or credit union lends about half the project cost as a first mortgage. A Certified Development Company (CDC) lends about 40% as a second mortgage, backed by the SBA. You put in the rest.
| Situation | Your down payment | CDC / SBA loan | Bank loan |
|---|---|---|---|
| Established business, standard property | 10% | 40% | 50% |
| Startup (under 2 years) or special-purpose property | 15% | 35% | 50% |
| Startup and special-purpose property | 20% | 30% | 50% |
Typical 504 structures. Lenders can require more.
Who qualifies
- For-profit small businesses that meet the SBA’s size standards
- Owner-occupied property: your business must use at least 51% of an existing building, or 60% of a new one. Buying your own condo suite for your own business meets this easily.
- Investors buying space only to lease out don’t qualify; they use conventional commercial loans.
Terms worth knowing
- The SBA portion carries a fixed rate based on Treasury rates, with 10-, 20- or 25-year terms for real estate, fully amortized with no balloon.
- The SBA portion is generally capped at $5 million ($5.5 million for manufacturers and certain energy projects); there’s no cap on the bank’s share.
- Prepaying the SBA portion early in its term can carry a penalty; ask your CDC how it’s calculated.
- Eligible project costs can include build-out, so a cold dark shell suite and its improvements can often be financed together.
A real example: Suite 106 at Windhaven Commercial
Suite 106 is 1,206 SF in Tega Cay, priced at about $325,620 at $270/SF. With 10% down, the estimated payment is about $2,090 a month, compared with about $3,220 a month to lease the same space at $32/SF.
| Suite 106 | Amount |
|---|---|
| Price at $270/SF | $325,620 |
| Your down payment (10%) | $32,562 |
| Bank loan (50%) at 7.25%, 25 years | $162,810 |
| SBA debenture (40%) at 6.97%, 25 years | $130,248 |
| Estimated monthly payment | $2,090 |
| Lease the same space at $32/SF | $3,220 |
Estimate only. Rates as of October 2026. Excludes taxes, insurance, association dues, upfit and closing costs. Subject to lender approval.
Steps to buy with a 504 loan
Talk to a 504 lender or CDC early
Ask them to pre-qualify your business and confirm your down payment before you commit to a space.
Choose your suite and price your build-out
Get a rough build-out budget from a designer or contractor so it can be included in the project cost.
Sign a purchase contract
Your lender orders the appraisal and environmental review and issues a commitment.
Close and build
The bank funds at closing; the SBA debenture typically funds after the project is complete.
Questions
Common questions
How much do I need down for an SBA 504 loan?
Usually 10% for an established business buying a standard property, 15% for a startup or special-purpose property, and 20% if both apply.
Can I use a 504 loan to buy a commercial condo?
Yes, if your business occupies it. A condo suite your business uses for its own operations is owner-occupied real estate.
Can I finance the build-out too?
Eligible project costs can include improvements, so build-out can often be rolled into the same 504 project. Confirm with your lender.
Can investors use a 504 loan?
No. The program is for owner-occupied property. Investors typically use conventional commercial financing.
Sources
- SBA 504 program materials from Certified Development Companies, including WBD, CDC New England, Michigan CDC and TMC Financing.
- NerdWallet and LendingTree summaries of SBA 504 requirements.
- Windhaven Commercial pricing; SBA 504 rate estimates as of October 2026.
See the numbers for a real suite
Six suites at Windhaven Commercial in Tega Cay are for sale from 1,206 SF, with layouts for 20 business types.