Understanding the SBA Loan Process

Step-by-step insight into securing an SBA 504 loan for your business expansion.

Learn how the SBA 504 loan works — and how this unique financing structure helps small businesses purchase real estate, equipment, or other fixed assets with low down payments and long-term stability.

What Is an SBA 504 Loan?

The SBA 504 loan program is a powerful tool designed to help small businesses expand by purchasing or improving fixed assets — such as commercial real estate, heavy machinery, or long-term equipment.

Unlike traditional loans, an SBA 504 loan offers:

• Low down payments (typically 10%)

• Fixed interest rates for up to 25 years

• Partnership structure between a private lender, a Certified Development Company (CDC), and the SBA

Because of this structure, the SBA loan process for a 504 loan is slightly more involved — but it’s designed to make business ownership and expansion more accessible.

The SBA 504 Loan Process — Step by Step

Below is a detailed walkthrough of the SBA loan process for an SBA 504 loan, from start to finish.

Step 1: Pre-Qualification and Initial Consultation

We start by determining if your business and project meet SBA 504 eligibility criteria.
You’ll provide basic financials, business information, and a summary of what you want to finance (property, equipment, or improvements).

Typical requirements include:

• U.S.-based, for-profit business

• Tangible net worth under $20 million

• Average net income under $6.5 million after taxes for the last two years

• Owner occupancy (at least 51% for existing buildings, 60% for new construction)

Step 2: Loan Structuring & Proposal

Once eligibility is confirmed, your lending team will structure the project financing.
The SBA 504 loan typically involves three parts:

• 50% from a private lender (bank or credit union)

• 40% from a Certified Development Company (CDC)

• 10% borrower contribution (down payment)

You’ll receive a loan proposal summarizing project costs, repayment terms, and next steps.

Step 3: Application & Documentation

This stage involves preparing the full SBA loan package. You’ll work with your CDC and lender to gather the following:

• 3 years of business and personal tax returns

• Interim financial statements

• Business plan and projections

• Purchase agreement or construction plans

• Appraisals and environmental reports (if applicable)

Your CDC submits the full package to the SBA for review and approval.

Step 4: Underwriting and SBA Approval

The SBA and CDC evaluate:

• Creditworthiness of the borrower

• Collateral and project viability

• Job creation and community impact

Once reviewed and approved, you’ll receive an SBA Authorization — your official commitment from the SBA.

Step 5: Closing and Funding

Closing is handled in coordination with your lender, the CDC, and any involved title or escrow company.
During this phase, all legal documents are finalized and funds are disbursed:

• The private lender funds their portion first

• The CDC/SBA portion follows once project milestones are met

Step 6: Post-Funding Management

After closing, you’ll make monthly payments to both the private lender and the CDC.
The CDC services the SBA 504 portion of the loan and ensures ongoing compliance with SBA requirements.

Benefits of the SBA 504 Loan Process

Choosing an SBA 504 loan gives you access to advantages that traditional bank loans can’t match:

• Low Down Payment: Keep cash in your business with as little as 10% down.

• Fixed Interest Rates: Lock in long-term stability and predictable monthly payments.

• Long Terms: Up to 25-year repayment options.

• Asset Ownership: Build equity instead of paying rent.

• Support Through the Process: The SBA loan process is guided by your CDC and lender, ensuring you’re supported every step of the way.

SBA 504 Loan Process Timeline

Why Work With APC Lending?

Navigating the SBA loan process can feel overwhelming — but it doesn’t have to be.
Our team has helped hundreds of small businesses secure SBA 504 loans efficiently and with confidence.

We handle the details — eligibility checks, documentation, and coordination with CDCs — so you can stay focused on your business.

Benefits of working with us:

• Streamlined SBA 504 loan process guidance

• Transparent communication and timeline updates

• Expertise in all stages of SBA financing

• Proven success helping small businesses grow

Ready to Begin the SBA Loan Process?

Get started on your SBA 504 loan today and take the next step toward business growth.

Call Us at 1-855-504-LOAN

Contact APC Lending today to learn more about the SBA 504 Loan Program and take the first step toward building long-term success for your business.