Research suggests SBA 504 loan rates for 2025 are around 6.43% for 25-year terms, competitive with traditional commercial loans. 

Traditional commercial loan rates range from 5.31% to 9.00%, depending on property type and terms. 

SBA 504 loans offer longer terms (up to 25 years) and lower down payments (10%) compared to traditional loans.

Current SBA 504 Loan Interest Rates

As of April 2025, the SBA 504 loan rates are:

• 6.437% for 25-year debentures (6.466% for refinancing)
• 6.457% for 20-year debentures (6.487% for refinancing)
• 6.348% for 10-year debentures (6.384% for refinancing)

These rates are fixed and tied to the 10-year U.S. Treasury note, making them suitable for long-term financing of commercial real estate or equipment.

Traditional Commercial Loan Interest Rates

Traditional commercial loan rates vary significantly by property type and loan term. 

Current rates range from 5.31% for multifamily loans to 9.00% for bridge loans, with typical commercial mortgages for owner-occupied properties around 6.43%.

Unlike SBA 504 loans, traditional commercial loans:

• Often have adjustable rates that may increase over time
• Typically require higher down payments (20% or more)
• Usually offer shorter fixed-rate periods

Key Differences Between SBA 504 and Traditional Commercial Loans

Loan Structure

SBA 504 loans follow a specific structure:

• 50% from a bank or credit union
• 40% from CDC/SBA
• 10% borrower contribution (down payment)

Traditional commercial loans generally require a larger down payment and do not include the CDC/SBA portion.

Eligibility Requirements

To qualify for an SBA 504 loan, businesses must be:

• For-profit businesses in the U.S.
• Have a net worth under $20 million
• Show net profit under $6.5 million

Ineligible businesses include non-profits, lending institutions, insurance companies, speculative development, gambling concerns, and private clubs.

Approved Uses

SBA 504 loans can be used for:

• Buying a building for your business
• Renovating your current business property
• Purchasing heavy equipment or machinery

Ineligible uses include working capital, inventory, rolling stock, broker fees, and bank attorney fees.

Key Benefits

The main advantages of SBA 504 loans include:

• Low down payment (as low as 10%)
• Fixed interest rates that won't increase
• Long repayment terms (up to 25 years)
• Preserved cash availability for other business needs

Why Choose an SBA 504 Loan in 2025?

Based on the current rate environment, an SBA 504 loan makes the most sense for businesses that:

1. Need to preserve working capital: The lower down payment requirement (10% vs 20%+ for traditional loans) allows businesses to keep more cash available for operations.
2. Value long-term stability: Fixed rates for up to 25 years provide predictable payments throughout the life of the loan.
3. Are planning for long-term growth: The competitive rates and extended terms make SBA 504 loans ideal for businesses making significant investments in real estate or equipment.

Example: Financing a $1 Million Project

For a $1 million project:

• Bank/Credit Union: $500,000 (50%), typically with market interest rates and secured by a 1st mortgage
• CDC/SBA: $400,000 (40%), with below-market fixed interest rates and secured by a 2nd mortgage
• Business/Borrower: $100,000 (10%) down payment

With this structure, a business can secure long-term, fixed-rate financing while minimizing the initial capital outlay.

Making the Right Choice for Your Business

When deciding between an SBA 504 loan and a traditional commercial loan, consider:

• How much capital you can afford to put down
• Whether you need rate stability for the entire loan term
• If your business meets the SBA eligibility requirements
• The specific use of funds and whether it qualifies under SBA guidelines

For many small to medium-sized businesses looking to purchase or improve real estate or acquire equipment in 2025, the SBA 504 loan program offers a compelling combination of competitive rates, long-term stability, and capital preservation.

Next Steps

If you're considering financing options for your business, schedule a no-risk consultation with a loan officer who can provide personalized guidance based on your specific situation.

FAQ’s on SBA 504 Loans Compared to Traditional Loans

What are the current interest rates for SBA 504 loans in 2025?

As of April 2025, SBA 504 loan rates are 6.437% for 25-year debentures, 6.457% for 20-year debentures, and 6.348% for 10-year debentures. Refinancing rates are slightly higher at 6.466%, 6.487%, and 6.384% respectively.

How much down payment is required for an SBA 504 loan?

SBA 504 loans typically require only a 10% down payment from the borrower, which is significantly lower than the 20% or more often required for traditional commercial loans. This lower requirement helps businesses preserve working capital.

Who qualifies for an SBA 504 loan?

Eligible businesses must be for-profit with a net worth under $20 million and net profit under $6.5 million. Non-profits, lending institutions, insurance companies, gambling concerns, and speculative development ventures are ineligible.

What can SBA 504 loan funds be used for?

SBA 504 loans can be used to purchase or renovate commercial real estate, construct new buildings, and acquire heavy machinery or equipment with a 10-year useful life. They cannot be used for working capital, inventory, or rolling stock.

How is an SBA 504 loan structured?

An SBA 504 loan has a three-part structure: 50% from a bank or credit union (secured by a first mortgage), 40% from a CDC backed by the SBA (secured by a second mortgage), and 10% down payment from the borrower. This structure helps distribute risk and secure favorable terms.