Owner-Occupied Commercial Real Estate Loans | 10% Down

On a $1,000,000 building, that's the difference between writing a check for $250,000 and writing one for $100,000.

If you're already paying rent on a space you'd rather own, that gap is the whole conversation. Let's walk through it.

What counts as owner-occupied

The SBA draws one line, and it's simpler than most people expect.

If you're buying an existing building, your business needs to occupy at least 51% of it. You can lease the rest out. That's not a loophole; it's written into the rules.

If you're building new, the number is 60%. You can permanently lease up to 20% of the new building, and lease another 20% temporarily, as long as your business grows into some of that space within three years and all of it within ten years.

Here's what that looks like in practice. A dental practice buys a 5,000 square foot building and uses 3,000 square feet for the practice. That's 60%, comfortably over the line. The remaining 2,000 square feet can go to a tenant, and the rent helps cover the mortgage.

Buy a strip mall and lease out every unit, though, and that's investment property. A 504 can't be used for it. We'll tell you that on day one rather than three weeks in.

Not sure which side of the line you're on? It's usually a five-minute phone call.

Your three financing options

Most owners buying their own building have three realistic paths. Here's the honest comparison, including the one that isn't us.

	Conventional mortgage	SBA 7(a)	SBA 504
Typical down payment	20–25%	Lender's call	10% (15% for start-ups or special-purpose property)
Rate structure	Usually variable, or fixed for 5–10 years then resets	Usually variable	Fixed for the full term on the SBA portion
Typical term	5–20 years, often with a balloon	Up to 25 years	10, 20 or 25 years
Best suited to	Strong balance sheet, plenty of cash, wants speed	Mixed needs: working capital, inventory, a business acquisition	Buying or building owner-occupied property, or long-life equipment
Who you deal with	One bank	One bank	A bank and a Certified Development Company

There's no universally right answer. Need to close in three weeks and have the cash? A conventional loan may serve you better. Need working capital alongside the building? A 7(a) is more flexible. But if you're buying the building you work in, and the down payment is what's standing in the way, the 504 is usually the cheapest way to do it.

The 25% question, worked

This is the part most lenders won't put in writing, so here it is with real numbers. Take a $1,000,000 building. Your business will occupy all of it. You've been in business six years.

Conventional route, 25% down: you put in $250,000. You finance $750,000 with the bank, usually at a rate that resets or balloons somewhere between year five and year ten.

SBA 504 route, 10% down: you put in $100,000. A bank finances 50%, $500,000, as a first mortgage. NSDC finances 40%, $400,000, through an SBA-backed second mortgage at a rate that's fixed for the full term, whether that's 10, 20 or 25 years.

The difference: $150,000 stays in your business. That's roughly two to three years of a key hire's salary, a piece of equipment you've been deferring, the cushion that gets you through a slow quarter without a line of credit, or the down payment on your second location, three years from now.

A second difference shows up later. On the conventional loan your rate resets, so you find out in year seven what the next decade costs. On the 504, the SBA portion is fixed the day it funds. You know your payment for twenty-five years.

Assumptions: an existing building, a business operating more than two years, and a single-tenant owner-occupier. Your bank sets its own rate and term on the first mortgage, and the SBA portion is priced at the monthly debenture sale.

Run your own numbers

Owning instead of renting

Here's the thing about rent: you can pay it for twenty years and own nothing at the end.

We hear a version of the same sentence from almost every borrower who walks through the door. I've been renting forever and I have nothing to show for it. Rents climb. Leases come up for renewal at a number you didn't choose. And the landlord's building gets more valuable while you're the one filling it.

When you own the building, three things change. Your payment stops moving. No renewal negotiation, no rent increase letter, no discovering that your lease is up in six months and the market has moved. You build equity instead of expense. The payment that used to disappear now buys you something. You can't be asked to leave. For a business whose customers know where to find it, that's not a small thing.

A monthly payment on a 504 loan is often comparable to what you're already paying in rent. Not always; it depends on the building, the rate and the term. But often enough that it's worth finding out before you sign another lease.

What it takes to qualify

The bar is lower than most people assume. In broad terms, your business needs to operate for profit; have a tangible net worth under $20 million and average net income under $6.5 million after taxes for the prior two years; occupy 51% of an existing building, or 60% of new construction; and use the money for eligible purposes: real estate, long-term equipment, or certain refinancing.

A newer business isn't disqualified, just different. If you've been operating two years or less, you'll typically need 15% down rather than 10%, and your application gets a closer look.

Read the full eligibility rules

A Nevada business that did this

Until this loan, Action Towing leased. A $1,406,800 SBA 504 loan, arranged in partnership with JPMorgan Chase, let John Howell and Robert Howell II, who inherited the business in 2004, own their property for the first time. They moved out of a 3,500 square foot building and into a 19,000 square foot warehouse in North Las Vegas.

“We assembled a good team and everything went pretty smooth,” said John Howell. “From the initial documents, Evan Dickson with NSDC and our banker Marcus Kline helped us hand-in-hand and made the process very easy.”
John Howell, Action Towing

Two lenders, one process, and a borrower who didn't have to project-manage it.

Read the full story

Questions we get

Can I lease out part of my building?

Yes. As long as your business occupies at least 51% of an existing building, the rest can go to tenants. Plenty of our borrowers count on that rent as part of the plan.

What if I'm a start-up?

You can still qualify. A business operating two years or less typically needs 15% down instead of 10%, and the application gets more scrutiny. It's a higher bar, not a closed door.

Does the building have to be in Nevada?

NSDC lends throughout Nevada, in Mojave County, Arizona, and in eleven eastern California counties. Where we lend.

This page is for general informational purposes only and does not constitute legal, tax, or financial advice. Loan terms and eligibility are subject to SBA guidelines and underwriting; figures verified September 2026.

Owner-Occupied Commercial Real Estate: How to Buy the Building You Work In

What counts as owner-occupied

Your three financing options

The 25% question, worked

Owning instead of renting

What it takes to qualify

A Nevada business that did this

Questions we get

Stop paying for someone else's building.