SBA 504 is intended for owner-occupied commercial real estate and can be used for purchases, property improvements, and eligible refinances. It does not fund working capital, inventory, or purely investment/rental properties. At AVANA, we focus on acquisition and refinance of owner-occupied CRE. Common project types we support include franchised hotels, medical offices, industrial/warehouse facilities, self-storage, grocery-anchored retail, franchise restaurants, and light manufacturing. We do not offer ground-up construction under our SBA 504 first-lien program.

In general, an eligible borrower is a U.S. for-profit operating company that will occupy at least 51% of an existingbuilding (or 60% at opening for new construction) and meets SBA size standards. As a rule of thumb, the SBA looks for tangible net worth under $20 million and two-year average net income under $6.5 million after taxes, plus the ability to repay and sound management. Startups and certain special-purpose properties may require additional equity. AVANA targets owner-occupied CRE with clear business use and supportable cash flow, and we partner with a qualified CDC to package and move the file efficiently.

SBA 504 transactions typically include three pieces: a bank 1st mortgage (usually ~50% of the project), an SBA/CDC 2nd mortgage (usually ~30%–40%), and borrower equity (usually ~10%–20%). The SBA/CDC portion is capped at $5.0MM for most projects, or $5.5MM for small manufacturers and qualifying energy-efficient projects. While the SBA piece is capped, there’s no set maximum total project size. For example, a $30MM project could be structured with a $21.0MM (70%) bank first mortgage, a $5.5MM (18%) SBA debenture, and $3.5MM (12%) borrower equity—allowing larger deals within the 504 framework. Equity requirements increase for certain situations: 15% for startups or special-purpose properties, and 20% if both apply.

The SBA/CDC second-lien is long-term fixed-rate financing, most commonly with a 25-year amortization(some are 20-year). The rate is set at the monthly debenture sale and then remains fixed for the life of the loan. The first-lien terms (fixed vs. variable rate and any interest-only period) are determined by the participating lender—such as AVANA—and vary based on credit, deal structure, and market conditions.

Most SBA 504 loans close in roughly 45 to 75 days. Timing depends heavily on how quickly the borrower provides underwriting items. The main pacing item is usually the real estate appraisal, which often takes 3 to 4 weeks. The bank and CDC underwrite in parallel, and once a complete package is submitted, the SBA typically issues approval in 5 to 10 business days.

For a quick assessment, we’ll typically need a brief business summary (what the company does, years in business, ownership), plus property details (type, location, size), use of proceeds (purchase or refinance), and the expected owner-occupancy percentage. Financial items generally include the last three years of business tax returns(and personal returns for any 20%+ owners), year-to-date financials with a debt schedule, and projections if needed. For refinances, also provide the current note(s), 12-month payment history, payoff information, and any leases/rent roll if part of the building has tenants. If you share your target structure (the 50/40/10 split) and the requested first-lien amount, AVANA can respond quickly with an eligibility view and coordinate next steps with the CDC so appraisals, environmental reports, and other third-party items are ordered at the right time.