SBA 504 Loan at Texas Capital Bank

The SBA 504 Loan program is a powerful financing solution for growing small businesses seeking to acquire major fixed assets while preserving working capital. At Texas Capital Bank, the SBA 504 offering is structured to help eligible business owners purchase, build, renovate, or refinance owner-occupied commercial real estate and long-term equipment with predictable, fixed-rate payments and a low down payment requirement. This product is designed for businesses that want long-term stability and favorable financing terms for projects that support expansion, job creation, and asset ownership.

Who this loan is for

The SBA 504 Loan is appropriate for small businesses that meet SBA size standards and are seeking to invest in their operations. Typical borrowers include manufacturers, professional service firms, healthcare providers, retail and hospitality operators, and other businesses that need owner-occupied commercial space or specialized equipment. The program is particularly attractive for companies that value long-term fixed financing and who have a proven ability to service debt.

Primary uses

• Purchase of owner-occupied commercial real estate (land and buildings)
• Construction of new facilities or expansion of existing buildings
• Renovation, modernization, or conversion of existing structures
• Purchase of long-lived, fixed assets such as heavy equipment or manufacturing machinery
• Refinancing of qualified debt when it supports business growth and job retention

Typical loan structure

SBA 504 transactions are typically structured as a partnership between a private-sector lender, a Certified Development Company (CDC), and the borrower. The common split is a first mortgage by a participating lender for a portion of the project cost, an SBA-backed CDC loan for a significant portion of eligible project costs, and a borrower equity contribution. This structure helps reduce the business owner’s upfront cash requirement while delivering long-term, fixed-rate financing for large capital projects.

Key benefits

• Long-term, fixed-rate financing for the SBA-backed portion, providing predictable payments and protection against rising interest rates.
• Lower down payment compared with many conventional loans, preserving cash for working capital and growth.
• Competitive financing for major capital expenditures that support expansion and job creation.
• Potentially lower overall collateral requirements due to the shared loan structure.
• Ability to finance both real estate and certain long-lived equipment in the same transaction.

Eligibility and occupancy requirements

Eligible borrowers must meet SBA small business size standards and be for-profit entities operating in eligible industries. The property must generally be owner-occupied and used for the borrower’s business operations. Occupancy requirements vary by project type: owner-occupancy for an existing building or a new construction project, or a combination of owner-occupied and leased space in certain situations. Specific eligibility nuances, such as higher borrower equity for startups or special-purpose properties, can apply and will be discussed during underwriting.

Loan terms and repayment

The CDC portion of the 504 loan is typically issued as a long-term, fixed-rate debenture with amortization periods commonly available to match the asset’s useful life, offering 10-, 20-, or 25-year terms for real estate projects in many cases. The first mortgage from the private lender may have a different term and amortization schedule. These combined terms are intended to align payments with the useful life of the financed assets, lowering monthly financing costs and improving cash flow predictability.

Costs and fees

SBA 504 financing involves standard closing costs, third-party due diligence fees, and program-related fees associated with the CDC and the SBA guarantee. Fees and down payment requirements vary depending on project type, borrower experience, and loan size. While the structure reduces down payment needs, borrowers should plan for equity injection, customary closing expenses, appraisal, environmental assessments, and potential CDC packaging fees.

Application process

The process generally begins with an initial consultation to evaluate project feasibility and eligibility. After prequalification, a formal application is submitted with supporting documentation. Underwriting includes review of the business’s financial statements, tax returns, projections, ownership background, and property appraisal and environmental reports. Once approved by the lender and CDC, the SBA reviews and issues the necessary approvals before closing and funding. The timeline depends on transaction complexity but is designed to be efficient for well-prepared applicants.

Required documentation

• Business and personal tax returns
• Interim financial statements and year-to-date profit & loss
• Business plan or project summary and financial projections
• Personal financial statements for principals
• Resumes of owners/key management
• Purchase agreement, construction contracts, or equipment invoices
• Property appraisal and environmental site assessment, when applicable

Why choose an SBA 504 loan?

For growing businesses that need to acquire or improve long-term assets, the SBA 504 loan is a proven tool to secure stable, long-term financing while minimizing initial cash outlay. Its combination of lower down payment, extended amortization, and fixed-rate stability can make large capital projects financially feasible and bankable. The program supports expansion, helps preserve working capital, and aligns debt service with asset lifecycles.

Working with Texas Capital Bank

When evaluating an SBA 504 loan, Texas Capital Bank provides guidance through the process with attention to structuring a transaction that aligns with your growth objectives. The bank collaborates with CDC partners and the SBA to coordinate underwriting and closing, and can advise on project eligibility, documentation requirements, and structuring options that preserve liquidity and support long-term goals.

If your business is planning a major acquisition, construction, or equipment purchase, an SBA 504 loan can be an effective solution to secure affordable, fixed-rate financing and support sustainable growth.

Address Bank: Dallas, Texas, U.S.
Bank: Texas Capital Bank
Headquarters: Dallas
Products: Loans & Credit
Type: SBA 504 Loan