SBA 504 Loan Requirements: Do You Qualify?

The four rules that matter most

Everything else is detail. These four decide it.

1. You operate for profit.

   Non-profits aren't eligible for a 504 loan. Neither are passive investment businesses.

2. You're under the size limits.

   Tangible net worth under $20 million, and average net income under $6.5 million after federal taxes for the prior two years. Most small businesses aren't close to either.

3. You'll occupy the building.

   At least 51% of an existing building, or 60% of new construction. You can lease out the rest.

4. You're buying something eligible.

   Owner-occupied commercial real estate, long-term equipment, or certain refinancing. Not working capital on its own, and not investment property.

If you remember only one rule about SBA 504 loans, let it be the third one. Occupancy is what separates a 504 from a commercial mortgage, and it's where most confusion lives.

Size limits, and why you've seen different numbers

Search for SBA 504 eligibility and you'll find the net worth cap quoted as three different figures, all on pages that look equally authoritative. The maximum loan gets quoted across a range that spans six times. Here's why, and what the actual numbers are.

Figures verified against the Code of Federal Regulations and SBA SOP 50 10 8 in September 2026.

Three things that table clears up.

The larger net-worth figure you'll see quoted elsewhere belongs to a different SBA program, not the 504.

There's no cap on your total project. The SBA limits its own portion, its 40%, and says nothing about the bank's first mortgage. A $10 million project can still use a 504 structure. Businesses talk themselves out of the program over this more than any other misunderstanding.

Some numbers you find are lender policy, not SBA rule. A lender can always be stricter than the SBA. When a page tells you there's a minimum project size, that's somebody's internal floor. The SBA doesn't set one.

Occupancy, in short

Your business occupies 51% of an existing building, or 60% of new construction. The rest can go to tenants.

New construction has a little more to it: you can permanently lease up to 20%, 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.

The full occupancy rules

What the money can and can't be used for

Why 504 doesn't cover rental property

Down payment, and what lenders actually look at

Your down payment is usually 10% of the project. Two things raise it:

• A newer business, operating two years or less, typically puts down 15%
• Special-purpose property, the SBA's list runs to hotels, gas stations, car washes, bowling alleys, golf courses, medical facilities and around twenty other categories, also typically 15%
• Both at once usually means 20%

Beyond the rules, in most cases a lender is looking at whether the business can service the debt, whether the principals have reasonable credit histories, and whether the building makes sense for what you do. There's no published SBA credit score cut-off. Anyone quoting you one is quoting their own policy.

Your project also needs to create or retain jobs: generally one job per $95,000 of SBA funding, or $150,000 for small manufacturers and qualifying energy projects. If your project doesn't meet that, it can still qualify by meeting one of the SBA's community development or public policy goals, and there are more of those than most borrowers expect.

These figures changed on 1 October 2025. Pages quoting the older per-job figure are working from the previous rule.

If you're a start-up

A newer business isn't disqualified. It's different.

If you've been operating two years or less, the SBA treats you as a new business: you'll typically need 15% down instead of 10%, and your application gets a closer look. A stronger projection, more documentation, sometimes more equity.

What we'd tell you honestly: prequalify early, even if you're a year out from buying. Knowing what you'd need to build toward is worth more than a yes or a no today.

What you'll need to apply

You don't need any of this to prequalify. That takes four details and a conversation. But when a file goes forward, expect to provide:

• Business tax returns, generally three years
• Personal tax returns and a financial statement for each principal
• Interim financials: profit and loss, balance sheet
• A purchase agreement or letter of intent on the property
• A debt schedule
• For a newer business, projections with the reasoning behind them

Your loan officer will tell you what's actually needed for your deal. Nobody expects you to assemble this before you've asked a question. The full checklist, stage by stage.

Businesses like yours that qualified

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Questions we get

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, and SBA rules change. Figures on this page were verified in September 2026.