In 2025, small business owners are turning to SBA 504 loans in record numbers to secure commercial properties. As interest rates begin to stabilize and real estate inventory tightens, SBA 504 loans are becoming a go-to financing option for entrepreneurs eager to own their workspace, expand into new facilities, or invest in strategic assets.
New SBA data reveals that 504 loan volume is up 21.0% year-over-year, with the commercial real estate (CRE) sector accounting for a growing share of this surge. But what’s fueling this shift—and what should small business buyers know before diving in?
This blog explores the factors behind the SBA 504 loan boom and how smart founders can capitalize on current market conditions.
What Is an SBA 504 Loan?
An SBA 504 loan is a fixed-asset financing program backed by the U.S. Small Business Administration. It’s designed specifically for businesses seeking to purchase or upgrade:
- Commercial real estate (office, retail, warehouse, manufacturing)
- Large equipment or machinery
- Energy-efficient renovations
Key Benefits of the SBA 504 Program:
- Up to 90% financing (with just 10% down)
- Fixed interest rates, often below market
- Long repayment terms (10, 20, or 25 years)
- No balloon payments
The loan is structured in three parts:
- 50% from a conventional lender (bank or credit union)
- 40% from a Certified Development Company (CDC)
- 10% equity from the borrower
Why Commercial Real Estate Buyers Are Rushing In
1. Cooling Interest Rates in 2025
After multiple rate hikes in 2023–2024, the Fed has begun to ease monetary policy slightly in 2025 to support small business growth and consumer demand. While rates remain elevated compared to pre-2020 levels, they’re lower than peak 2024 figures—creating urgency among buyers who want to lock in long-term financing before another hike.
💬 “We’re seeing business buyers re-enter the real estate market as rates cool and competition tightens,” notes a senior SBA loan officer.
2. Inventory Is Shrinking
Across many U.S. metro areas, commercial inventory is thinning, especially for office-warehouse hybrids and light industrial spaces. Small business buyers are acting fast to purchase properties before prices climb or availability drops further.
High-demand sectors include:
- Logistics & fulfillment hubs
- Retail storefronts with drive-thru capacity
- Flex spaces for creative or tech teams
- Light manufacturing and fabrication facilities
As leasing costs rise and availability shrinks, owning becomes more appealing than renting—especially with SBA 504 loans offering 90% financing and lower long-term costs.
3. Baby Boomer Transitions Fuel Demand
A growing number of baby boomer entrepreneurs are selling their businesses or properties, creating real estate acquisition opportunities for younger buyers or business buyers pursuing acquisition-based growth.
These transitions are often bundled with the sale of real estate, making 504 loans the ideal solution to finance both business acquisition and the property under favorable terms.
Is an SBA 504 Loan Right for You?
If you’re planning to buy or expand a business property, the 504 loan program could be the perfect fit.
Consider a 504 loan if you:
- Plan to occupy 51% or more of the property
- Need to renovate or build owner-occupied space
- Want a long-term fixed rate with no surprises
- Have 10% cash equity or equivalent collateral
What You’ll Need:
- A strong business plan or operational history
- Personal and business financial statements
- Property appraisal and development plans (if applicable)
- SBA loan prequalification via a CDC partner
SBA 504 Loan vs. Traditional CRE Loan
| Feature | SBA 504 Loan | Conventional CRE Loan |
|---|---|---|
| Down Payment | 10% | 20–30% |
| Interest Rate | Fixed (typically 6%–8%) | Variable or fixed (often higher) |
| Terms | Up to 25 years | Typically 10–20 years |
| Balloon Payments | None | Common |
| Approval Process | Requires SBA/CDC review | Faster, but stricter credit filters |
📌 504 loans are ideal for long-term ownership, while conventional loans may work better for short-term investors or high-cash borrowers.
Tips to Maximize Your SBA 504 Loan Approval Chances
- Work with a CDC early
– Certified Development Companies handle the SBA portion of your loan. Partner with one experienced in your region or sector. - Get prequalified before shopping
– Know what you can afford and how fast you can close. - Document cash reserves and business health
– SBA wants assurance that your business will thrive post-acquisition. - Align your growth plan with property use
– Whether expanding manufacturing, launching a franchise, or consolidating offices—be specific.
Conclusion: A Golden Window for Property-Buying Entrepreneurs
With interest rates starting to cool, inventory tightening, and the SBA 504 loan program booming, now is an excellent time for small business owners to consider owning instead of renting.
Whether you’re expanding a growing business or taking over a retiring founder’s operation, SBA 504 loans offer affordable, long-term CRE financing that’s tailor-made for small business success.
Take the Next Step with BoomerBiz Loans
Ready to elevate your entrepreneurial journey? BoomerBiz Loans specializes in supporting baby boomer business acquisitions, offering a streamlined 3-step loan application process for fast approvals within 24–48 hours.
With competitive low-interest rates, flexible terms, and loans up to $10M, we’re here to assist both first-time buyers and experienced business owners.
Don’t let funding be a hurdle to your success. Start Your Loan Application today and join the ranks of successful entrepreneurs who’ve experienced the BoomerBiz advantage.
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