What business loans are available to buy commercial real estate?

Owner-Occupied vs. Investment Real Estate: Different Loan Products

Business loans for real estate split into two distinct categories with different products: (1) owner-occupied commercial real estate — a business buying or renovating a building it will operate from (office, warehouse, retail, manufacturing) — and (2) investment/rental real estate — properties purchased to generate rental income. This page covers owner-occupied commercial real estate for operating businesses. Owner-occupied commercial real estate is the primary use case for the SBA 504 loan program and a significant use case for SBA 7(a) — both are structured for businesses that will occupy and operate from the financed property.

SBA 504: The Flagship Owner-Occupied CRE Product

The SBA 504 loan program is specifically designed for owner-occupied commercial real estate and heavy equipment acquisitions. The 504 structure is a three-party split: the bank or conventional lender provides 50% of the project cost (first mortgage), the SBA-backed Certified Development Company (CDC) provides 40% via an SBA debenture (second mortgage, below-market fixed rate), and the borrower injects a minimum of 10%. The SBA/CDC portion carries a fixed interest rate set at the time of debenture sale — providing rate certainty on 40% of the financing for the life of the loan (typically 10 or 20 years). Eligibility requires the business to occupy at least 51% of the property; a business in an existing building must occupy 51%+ immediately, while for new construction the requirement rises to 60% occupancy.

• Bank portion (50%): first mortgage at market rate; typically 5–7 year term with 25-year amortization
• SBA/CDC portion (40%): second mortgage at fixed below-market rate; 10-year or 20-year term
• Borrower equity injection (10%): minimum 10% down; start-ups or special-use properties require 15–20%
• Occupancy requirement: business must occupy 51%+ (existing) or 60%+ (new construction) of the property
• Eligible uses: land, building acquisition, construction, renovation, and major fixed equipment

SBA 7(a) for Smaller Commercial Real Estate Deals

For commercial real estate purchases under $500,000 — or for deals where the 504's three-party structure adds administrative complexity — the SBA 7(a) loan is a flexible alternative. SBA 7(a) can finance owner-occupied commercial real estate up to the program's per-loan maximum of $5M. Since July 4, 2026, the SBA decoupled 7(a) and 504 exposure limits: a qualified borrower can now hold up to $5M through 7(a) *and* up to $5M through 504 at the same time — a combined $10M cap, up from the two programs previously sharing one $5M ceiling — though the individual per-loan maximum for each program is unchanged. See the full rule breakdown if you're layering a 504 real estate loan with separate 7(a) financing. The 7(a) uses a simpler two-party structure (bank + borrower) with SBA guaranteeing up to 85% of the loan. Terms run up to 25 years for real estate, with down payments typically 10–15%. Unlike 504, 7(a) proceeds can be used for mixed purposes — if a borrower needs both real estate and working capital in a single loan, 7(a) is the flexible instrument.

Conventional Commercial Mortgages

Businesses that do not qualify for or prefer not to use SBA programs can use conventional commercial mortgages from banks, credit unions, and commercial lenders. Conventional commercial mortgages typically require 20–25% down, have shorter terms (5–10 years with 15–25 year amortization creating balloon payments), and carry variable or fixed rates based on Treasury or SOFR benchmarks. For borrowers with strong personal credit, substantial business equity, and demonstrated DSCR above 1.25x, conventional commercial mortgages can be competitive with SBA products — especially when the SBA guarantee fee (3.5% of the guaranteed portion) makes the all-in cost of an SBA loan higher than a conventional alternative.