What Is an SBA 504 Loan?

What Is an SBA 504 Loan?

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Do you own a small business, and there’s a need for high-value equipment? Or maybe you want to purchase commercial real estate. If you’re in need of finance and are unable to figure out the best possible solution, an SBA 504 loan may just be the oil to your ache.

Presenting you with this guide is ALT Financial. We will look everything you need to know about SBA 504 loan.

SBA 504 Loan

For small business owners looking to grow, expand, or invest in long-term assets, financing can be one of the biggest hurdles. That’s where the SBA 504 Loan Program comes in — a powerful tool backed by the U.S. Small Business Administration (SBA) that offers affordable, long-term, fixed-rate financing.

The SBA 504 Loan Program is specifically designed to help small businesses finance major fixed assets like real estate, buildings, and heavy equipment. Unlike traditional loans, 504 loans are structured through a unique partnership between:

  • The borrower (you):typically contributes 10% of the project cost.
  • A Certified Development Company (CDC):a nonprofit organization that provides 40%.
  • A third-party lender (bank or credit union):covers the remaining 50%.

This setup helps reduce the financial burden on small business owners while giving them access to larger capital at more favorable terms.

SBA 504 Loans vs. CRE Mortgages

If you’re exploring SBA 504 loans, you might also come across Commercial Real Estate or CRE mortgage. CRE mortgages are traditional bank loans used to purchase or refinance real estate used for business purposes. While both options can finance property purchases, there are key differences:

  • CRE mortgages often require higher down payments (typically 20%–30%) and may have variable interest rates.
  • SBA 504 loans offer lower down payments (as little as 10%) and fixed interest rates for up to 25 years.

For many small businesses, the SBA 504 loan offers a more accessible and stable route to property ownership compared to a conventional CRE mortgage.

Key Features and Benefits

  • Loan Amounts: Up to $5 million (or $5.5 million for manufacturers or energy-efficient projects)
  • Repayment Terms: Fixed terms of 10, 20, or 25 years
  • Interest Rates: Competitive fixed rates, typically 5%–7%
  • Collateral: The asset being financed is the primary collateral

This makes the 504 program particularly attractive for businesses investing in long-term growth while seeking predictable payments and low rates.

Who Qualifies?

To be eligible, your business must:

  • Be for-profit and located in the U.S.
  • Have a net worth under $15 million
  • Have an average net income of $5 million or less after taxes for the previous two years
  • Use the funds for eligible fixed assets
  • Occupy at least 51% of the property (if purchasing an existing building), or 60% if building new

How to Apply

  • Find a CDC:Locate one through the SBA’s CDC directory.
  • Consult with a lender:A participating bank or credit union will usually handle 50% of the project financing.
  • Submit required documentation:Business plans, tax returns, project cost breakdowns, and financial statements.
  • Await SBA review and approval:The process typically takes 30 to 90 days.

Recent Program Updates

As of late 2024, the SBA announced several changes to the 504 loan program to make it even more accessible. These updates include streamlined eligibility criteria and improved refinancing options, making it easier for small businesses to lower their existing loan payments and access capital for expansion.

Is an SBA 504 Loan Right for You?

If your business is planning to buy property, upgrade equipment, or expand facilities — and you want fixed rates, longer terms, and lower down payments — the SBA 504 Loan could be your best financing option.

To get started, consult a Certified Development Company in your area or visit the official SBA 504 Loan page for more information.

Need help navigating the SBA 504 or CRE mortgage options, or want to know about reliable SBA loan lenders? Let us know — we’re happy to connect you with experts who can guide you through every step.

Also Read: What Is an SBA Loan? Everything You Need to Know

How to Remove Someone from a Mortgage Without Refinancing

How to Remove Someone from a Mortgage Without Refinancing

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It is possible to remove a name from a mortgage, but it depends on various factors and can be complex. This blog post explains the process of removing someone from a mortgage without refinancing. The main ways to do so include:

  • Loan assumption
  • Loan modification
  • Sell your home
  • Pay off your home
  • Cosigner release
  • Quitclaim deed

Knowing how a mortgage works can help you understand your options. It also helps you understand that you can only remove someone from a mortgage with permission from the lender, irrespective of the reason.

Why Would You Remove Someone from a Mortgage?

There are a few reasons why you would remove someone from a mortgage. For example, if you split from your partner and want to keep the home to yourself, you may have to remove their name legally. Or your co-signer may no longer want to be financially and legally responsible for the mortgage payments, so they want to remove their name.

Removing Someone from a Mortgage Without Refinancing

While you may think you need to refinance your mortgage to remove a name, it is often not so. For instance, you may refinance your mortgage to pay out your ex-spouse so they are not on the mortgage. However, there are various ways to help homeowners or co-signers remove a name from their mortgage agreement without refinancing. Here’s how to do it:

  • Check your options:How you remove a name from a mortgage depends on the situation. You may assume the loan on your own or request your ex-spouse to sign over ownership rights so they can be released from the loan.
  • Talk to your lender: Irrespective of the situation, you need to speak with your lender to remove a name from the mortgage. Your lender must agree to the terms of your new agreement (the most complicated part of the process).
  • Do the paperwork:Ensure you complete all necessary paperwork if you want to go through a loan assumption or modification. If you sell your home, get through the escrow process to remove your name from the mortgage.

Other Methods to Remove Someone from a Mortgage Without Refinancing

While loan assumption, modification, and home sale are the more common paths, here are a few additional strategies that may be available depending on your lender and your loan agreement:

  1. Cosigner Release

If the person you’re trying to remove is a cosigner and not a co-borrower, some lenders offer a cosigner release option. This typically applies after a set number of on-time payments have been made (often 12 to 36 months). You’ll need to demonstrate that you’re financially capable of handling the mortgage alone.

Keep in mind: Not all lenders offer this, and approval depends on your credit score, income, and payment history.

  1. Pay Off the Mortgage

While not a simple solution, if you’re in a position to pay off your home loan entirely—either through personal funds, a gift, or another loan—you can eliminate the mortgage altogether. Once the loan is paid in full, you can remove the other person from the title via a quitclaim deed.

This is ideal for situations where someone wants full ownership and has the means to settle the debt.

  1. Sell the Property

If neither party wants to continue with the mortgage, selling the home may be the best option. The sale proceeds can be used to pay off the mortgage, and the title clears both names from responsibility. You’ll then split the remaining equity based on what’s outlined in your agreement or divorce settlement.

Selling may also be the simplest way to avoid future disputes or financial risk for either party.

  1. Quitclaim Deed (for Title Only)

A quitclaim deed is a legal document used to transfer ownership interest in a property. While this does not remove a name from the mortgage itself, it can transfer title ownership from one party to another.

Important: The person who signed the quitclaim deed is still financially responsible for the mortgage unless their name is also removed through another method, such as loan assumption.

Also Read: Inheriting a Property with a Mortgage: What Are Your Options?

Legal and Financial Considerations

Removing someone from a mortgage has both legal and financial implications. Here are a few things to keep in mind:

Credit Impact: If the mortgage remains unpaid or is defaulted on all listed borrowers’ credit will be affected, even if one person is no longer living in or using the property.

Equity Disputes: If the property has appreciated, make sure there is a fair agreement on how equity is divided before transferring title or making other legal moves.

Legal Advice: It’s wise to consult with a real estate attorney or mortgage specialist to ensure the process is completed correctly, especially in the context of divorce or separation.

Also Read: Refinancing an Inherited Property: What You Need to Know

Final Thoughts

While refinancing is the most common way to remove someone from a mortgage, it’s not the only option. Alternatives like loan assumption, cosigner release, or even selling the home can help achieve the same result, without the complexity or cost of refinancing. However, lender cooperation and legal documentation are essential for any route you take.

Always start by speaking with your lender and exploring your specific options before making any decisions.