Current SBA 504 rates · September 2026 SBA 504 historical rates → Las Vegas (702) 877-9111Reno (775) 770-1240
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The rules

Can You Use an SBA 504 Loan for Rental or Investment Property?

No. An SBA 504 loan cannot be used to buy investment or rental property. The business must occupy at least 51% of an existing building, or 60% of a newly constructed one. But a business that occupies most of a building may lease the remaining space to tenants and still qualify, and that exception saves more deals than the rule kills.

The rule, in one line

51% of an existing building. 60% of new construction. If you remember only one rule about SBA 504 loans, let it be this. The full occupancy rules.

What counts as occupying

  • A dentist using 3,000 of 5,000 square feet and leasing the rest: qualifies.
  • A contractor buying a building with a yard and a small office suite he leases out: qualifies, if the contractor's share clears 51%.
  • Buying a strip mall to lease every unit: does not qualify.
  • Living upstairs from your business: different rules; ask.

Mixed-use buildings

This is the genuinely qualifying case. A building where your business takes the majority of the space and tenants take the rest is exactly what the program was written for. The tenant income can help carry the loan, the tenants' space can be a growth path for your own business later, and the whole building comes in under the 504's 10% down payment and fixed rate rather than an investor mortgage's terms.

What 504 is not for

  • Pure investment or rental property
  • Buying to flip
  • A building your business won't occupy at the required level
  • Working capital on its own

Straight, no hedging: if the plan is to own real estate and collect rent, the 504 isn't your loan.

What to do instead

For investment property, a conventional commercial mortgage is the normal route. For a business that needs working capital, inventory or an acquisition rather than a building, an SBA 7(a) may fit. 504 vs 7(a). We'd rather point you to the right product now than have you find out in week three.

Questions

Can I lease part of my building?
Yes. Up to 49% of an existing building.
What if a tenant leaves and I drop below 51%?
The test applies when the loan is made, to the space your business occupies. A tenant leaving doesn't reduce your occupancy. Call servicing before any material change.
Does a warehouse I use for storage count as occupied?
Yes, if your business uses it.

Verified against 13 CFR 120.131 in September 2026. This page is for general informational purposes only.