The SBA provides a partial guarantee on 504 loans, but it’s important to note that the guarantee structure for these loans is somewhat different from other SBA loan programs. The SBA guarantees up to 50% of the total project cost through the 504 loan program.
In a typical 504 loan structure:
SBA Portion: 50% of the total project cost.
Private Lender Portion: Up to 40% of the total project cost.
Borrower Equity: At least 10% of the total project cost.
The 504 loan program is designed to help small businesses acquire fixed assets, such as real estate or equipment, with long-term, fixed-rate financing.