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SBA 504 Real Estate and Equipment Financing


By Michael Fanger

SBA 504 Financing

Over the past few years we have seen more financing of projects using the SBA’s 504 program.  It’s worth considering for your next development if you are an experienced builder and operator. The SBA 504 loan program is not as well-known as the SBA 7(a) program because the banks don’t promote it the same way. Banks typically sell 7(a) loans and make a profit doing so. That’s not the case with the 504.

More laundry business owners are considering SBA 504 loans to finance new laundry developments and equipment purchases.

With a 504 loan, you can obtain up to 90 percent financing, and a 20 year fixed rate on 40 percent of the project. The bank makes two loans totaling 90 percent of the project cost.  The loan for 40 percent of the project gets sold by SBA after the business is open for business with a certificate of occupancy. Closing expenses can be included in the project. This can help you to preserve your capital for operations, or your next project.

SBA 504 Case Study

In this case study, a long-time operator of multiple laundromats, all in leased locations, purchased land, erected a building, and equipped and opened a new 4,000 square foot laundromat. The project cost was $4.1 million.  Eastern Funding loaned $2 million on a long term mortgage. Eastern Funding made a bridge loan for $1.7 million that was paid off with an SBA debenture at 5 percent fixed for 20 years, inclusive of all 504 program fees.


Download an SBA 504 Financing for Laundromats Checklist