The Hidden Growth Tool in Your Loan Portfolio: How to Spot SBA 504 Opportunities Before Your Competitors Do

For lenders, the SBA 504 program isn’t just another product to place on the shelf. It’s a lever for deeper relationships and stronger portfolios. The most successful institutions are the ones that anticipate borrower needs before the client even recognizes the opportunity, positioning themselves as both advisor and capital partner. With this in mind, how will you know when you’ve come across a potential SBA 504 project? We’ve compiled a list of quick tidbits on what to look out for.

How to Spot an SBA 504 Borrower

  • Owner-occupied commercial real estate at least 51% occupied by the borrower’s business (60% for new construction).

  • Businesses looking for long-term, fixed-rate financing to stabilize cash flow.

  • Owners wanting to preserve working capital with a low down payment (as little as 10%).

More Than Just New Purchases. Think Refinance.

  • The SBA 504 Refinance with Expansion Program allows for refinancing existing qualified commercial real estate or heavy equipment debt while funding the new expansion.

  • Expansions (including bank, closing and professional fees) must be at least 50% of the total project costs, and can include building additions, facility upgrades, or new equipment purchases.

  • Project Example: A manufacturer can refinance their current owner-occupied building loan and add a new production line in one transaction.

504 Refinance Without Expansion: Property Refinance + Cash Out

  • Allows refinancing of existing qualified commercial real estate debt without a requirement for expansion.

  • Borrowers can consolidate debt from multiple lenders into a single long-term fixed-rate package.

  • Cash Out Available: Give your borrower the ability to use property equity to pay off business credit cards, lines of credit, or cover up to 18 months of operating expenses, all while locking in a stable long-term rate. Financing is available up to 90% loan-to-value, based on a current appraisal.

  • Project Example: A medical practice can refinance its current building loan, pay off its stale line of credit, and access additional working capital for growth initiatives, all in one SBA 504 transaction.

Why you should care

  • Lower Risk: The bank holds the first mortgage, typically at a maximum 50% LTV, the SBA/CDC covers up to 40%, and the borrower only brings 10% to the table.  On refinance projects, the borrower taps into existing property equity.

  • Portfolio Retention: Keep your best customers in-house by offering competitive structures.

  • Bigger Deals Made Possible: The combined financing structure can make multi-million dollar projects feasible for clients you might otherwise have to turn away.

common opportunities you might be missing

  • Businesses with maturing balloons on commercial real estate loans that would benefit from a fixed rate for 20–25 years.

  • Owners looking to move from leasing to owning their building to build equity and control occupancy costs.

  • Borrowers seeking to tap into built-up equity within their property to reinvest into their business.

  • Clients with existing adjustable-rate mortgages concerned about rising rates and wanting stability.

trigger questions

  • “Do you own your building and does your business occupy 51% or more of the property?”

  • “Have you thought about expanding or renovating your space?”

  • “Would you like to lower your monthly payment while funding a new growth project?”

  • “Do you have a balloon payment coming due in the next 12–24 months?”

current market timing advantage

  • SBA 504 effective rates remain competitive with conventional fixed rates and are often lower. They also lock in for up to 25 years.

  • With economic uncertainty, SBA 504 lending enables clients to secure long-term stability while banks control credit risk.

In today’s rate environment, in which stability and liquidity matter more than ever, the ability to unlock growth through creative refinancing or expansion financing is a true differentiator. Every time you identify a 504 opportunity, you give a business owner the ability to invest in stability, expansion, or innovation without overextending their resources. And when you do that, you deepen loyalty and create borrowers who see you as their long-term partner, not just their lender.

Interested in learning how to ramp up your 504 lending? Contact your local Client Relations Officer at client-relations@bside.org.

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