An SBA 504 loan is a commercial real estate loan that can be used for property acquisition, refinancing, new construction, or renovation. Backed by the U.S. Small Business Administration (SBA), these loans are designated for small business owners looking to own and occupy commercial real estate for their business.
SBA 504 Loan Snapshot
Up to $15 million
First mortgage¹Up to 90%
LTV / LTC¹Up to 25 years
Permanent SBA loan termConstruction
Interim financing available¹Qualifying construction projects may receive up to $20 million combined financing: interim first up to $15 million plus an interim second up to the SBA-authorized amount. Leverage varies by project.
Ways to Use an SBA 504 Loan
SBA 504 Construction Financing
Tell us what you're building. We'll help assess the financing fit.
Build-to-suit
An established business builds or renovates its own facility, such as a law firm's office. Current cash flow supports the new debt. Liberty funds the construction first and SBA interim second.
Expansion
An established business adds space or capacity, such as a distributor expanding its warehouse. Existing operations and projected growth support repayment. Liberty funds both construction loans.
New development: SBA interim seconds
An experienced operator develops a new location, such as another hotel. An approved bank provides the first mortgage. Liberty funds the SBA interim second through construction; the bank provides the permanent first.
For build-to-suit and expansion, Liberty remains the permanent first-mortgage lender after completion and satisfaction of conversion requirements. In all three structures, the permanent SBA 504 loan repays the interim second once funding conditions are met.
Project leverage: Build-to-suit and expansion: up to 90% of eligible project costs; 85% for special-purpose properties. New development: up to 85% combined loan-to-cost; 80% for a new business with a special-purpose property; 75% for hotels.
Qualifying build-to-suit and expansion projects: up to $20MM combined financing, with an interim first up to $15MM and an interim second up to the SBA-authorized amount. For new development, Liberty funds only the interim second. All limits are subject to credit approval and SBA eligibility.
Breaking Down a 504 Loan
A typical eligible project combines a first mortgage, an SBA-backed second mortgage and borrower equity.
A common structure is 50% first mortgage, 40% SBA-backed financing through a Certified Development Company (CDC), and 10% borrower equity. Some projects require more equity.
The CDC arranges the permanent SBA 504 loan. For construction, that financing funds after completion and satisfaction of SBA funding requirements. Interim financing covers the SBA portion during the build.
Liberty can fund both interim mortgages for qualifying build-to-suit and expansion projects, or provide only the interim second behind an approved bank first for eligible new development.
Closing Timeline
We can close your 504 loan 45 days after receiving your signed conditional commitment letter (CCL). We issue a CCL after you accept our quote and submit all required documents.
You sign your commitment letter and pay a small deposit, which applies to your final down payment.
We do an internal credit review, source third party reports, and interface with the local Certified Development Company (CDC).
The CDC submits your loan package to the SBA.
The SBA provides authorization and approval on third party reports.
We close your loan.
The Interim Period
The interim period includes the build.
On a construction project, interim financing remains in place through construction and the time needed for permanent SBA 504 funding. It is not a standard 45–60-day bridge.
Borrower equity is funded first. Construction draws are made monthly, subject to third-party inspections and funds control.
After completion and satisfaction of funding requirements, the permanent SBA 504 loan repays the interim second. The permanent first mortgage remains separate.
Fees
Eligible project and financing costs may be included in the approved budget, subject to SBA rules and credit approval. Borrower equity and any ineligible costs remain the borrower’s responsibility.
SBA 7a to SBA 504 Refinance
Own a business property financed with an SBA 7(a) loan? SBA 504 refinancing may be available when the debt and borrower meet current eligibility requirements.
Liberty and your CDC can review the existing debt, property, business cash flow and proposed structure. Rates, proceeds and repayment terms depend on the transaction.
Business
Eligibility Requirements
To qualify for a 504 loan, your business should: - Operate a for-profit business and meet SBA size and eligibility requirements.
- Occupy at least 51% of an existing building; new construction generally requires 60% initially, additional reserved space within three years and at least 80% within ten years.
- Demonstrate repayment capacity and meet project-specific equity requirements.
Construction
Eligibility
To qualify for a 504 loan, you should: - For build-to-suit and expansion: a business operating for at least five years.
- For new development: an operator with at least two comparable projects built and operated.
- Meet Liberty’s credit, guaranty, contractor and project-readiness requirements.
How much equity will I need?
Build-to-suit and expansion generally require at least 10% equity, or 15% for special-purpose properties. New development requires at least 15%; 20% for a new business with a special-purpose property; and 25% for hotels. All projects remain subject to SBA requirements and credit approval.
What can the project budget include?
Land, construction, expansion, major renovation, permanent building fixtures and eligible soft costs, contingency and interest reserve. Equipment, FF&E and rolling stock are excluded from this Liberty construction program.
Do I need permits before closing?
All discretionary approvals must be final at closing. Building permits generally must be issued or ready to issue; limited exceptions may apply where only ministerial approvals remain. No construction draws are made before permits are issued.
How to Apply
Complete your entire application online through our secure portal.
Step1
Register for our secure online portal.
Step2
Complete and submit your application and supporting documents.
Review our SBA 504 document checklist.
Step3
Get connected with a loan officer and get your quote.
Construction financing is subject to Liberty credit approval, SBA eligibility and final documentation. Terms and leverage vary by project. This is not a commitment to lend.