Both can finance owner-occupied commercial real estate, but they’re built differently. An SBA 504 loan is purpose-made for fixed assets: a bank funds roughly 50% of the project, a Certified Development Company (CDC) funds about 40% with an SBA-backed debenture at a fixed rate, and you contribute around 10%. It’s the choice when you want the longest terms, a fixed rate on a big chunk of the loan, and you’re primarily buying or refinancing property or heavy equipment. Through the lenders Radix works with, 504-style financing runs roughly 6.8%–8% on a 25-year term with up to 90% loan-to-value.
An SBA 7(a) loan is the flexible all-in-one. There’s no fixed split — the whole loan is one note — and no requirement that a set percentage go to real estate, so you can combine the property purchase with working capital, debt refinancing, or even a business acquisition. Through Radix’s lenders, 7(a) real-estate financing runs about 6.8%–11.25% on a 25-year term, with over 100% loan-to-value available (so a smaller or no down payment is possible for qualified borrowers). To get the full 25-year term on a 7(a), at least 50% of the proceeds generally need to be tied to the real estate.
There’s also a non-SBA owner-occupied option through Radix’s lenders — rates as low as 6.5% on 25-year terms, up to 80% LTV, available in 23 states, with the property used as collateral — for borrowers who’d rather skip the SBA process entirely.
For SBA programs, the borrowing business must occupy at least 51% of the property. Radix has facilitated more than 3,500 SBA loans and over $700 million in funding across all 50 states, and helps owners pick — and qualify for — whichever structure fits the deal.
Key facts at a glance
A 504 loan is really two loans plus your equity, stacked:
The appeal: a long term (often 25 years), a fixed rate on the largest piece, and a relatively low down payment. The constraint: 504 proceeds must go to fixed assets — owner-occupied real estate, major equipment, ground-up construction, or substantial renovation. You can’t use a 504 for working capital or to refinance non-real-estate debt.
A 7(a) for real estate is a single note, fully amortizing, with a variable rate (Prime + margin) and a term up to 25 years when the loan is primarily real estate. Because 7(a) proceeds aren’t restricted to fixed assets, you can roll the property purchase together with working capital, debt refinancing, leasehold improvements, or a business acquisition — one loan, one payment, one closing. Through Radix’s lenders, over 100% LTV is available, which can mean little or no money down for a qualified borrower. The catch is the rate is variable and generally higher than the 504’s fixed CDC piece, and to keep the full 25-year term at least half the proceeds need to be tied to the real estate (otherwise the term steps down on a sliding scale).
Radix also works with lenders that fund owner-occupied commercial real estate without an SBA guarantee: rates as low as 6.5%, 25-year terms, up to 80% LTV, available in 23 states, with the property as collateral and a global debt-service ratio of 1.25 or higher required. Less paperwork, no SBA process — in exchange for a higher down payment and a smaller geographic footprint.
| SBA 504 | SBA 7(a) | Non-SBA owner-occupied | |
|---|---|---|---|
| Best for | Buying/refinancing property or heavy equipment; want fixed rate & lowest down payment | Property + working capital / debt refi / acquisition in one loan; minimal down payment | Skipping the SBA process; have a larger down payment |
| Structure | ~50% bank + ~40% CDC (SBA debenture) + ~10% borrower | Single note, fully amortizing | Single conventional note |
| Rate (via Radix) | ~6.8%–8% (CDC piece fixed) | ~6.8%–11.25% (variable, Prime + margin) | From 6.5% |
| Term | Up to 25 years | Up to 25 years (if 50%+ to real estate) | 25 years |
| Max LTV | 90% | Over 100% available | 80% |
| Use of funds | Fixed assets only | Real estate + working capital + debt refi + acquisition | Owner-occupied real estate |
| Occupancy | 51%+ owner-occupied | 51%+ owner-occupied | Owner-occupied, property as collateral |
| Geography | Nationwide | Nationwide | 23 states |
Choose SBA 504 if: you’re primarily buying or refinancing real estate (or large equipment), you want a fixed rate locked in on most of the loan, and a roughly 10% down payment works for you. Classic fit: an established business buying its own building.
Choose SBA 7(a) if: you want to combine the property with other needs — working capital, consolidating high-rate debt, buying a business — in a single loan, or you want the smallest possible (even zero) down payment. The trade-off is a variable rate. Classic fit: an owner buying a building and needing operating cash, or someone acquiring a business that comes with real estate.
Choose the non-SBA option if: you’d rather not deal with the SBA process, you have a 20%+ down payment, you’re in one of the 23 states it covers, and your debt-service coverage is comfortable (1.25+).
Commercial real estate loans — 504, 7(a), or non-SBA — typically close in 6 to 10 weeks, because they all require a commercial appraisal and a Phase I environmental report, both ordered from independent firms that run on their own schedules. Getting those moving on day one is the biggest thing you can do to keep the deal on the faster end. More on SBA loan timelines.
Not sure which fits? Pre-qualify with Radix and the team will model it. See the commercial real estate page for full program details, and the recent closings for real examples — including a hotel financed at 90% LTV around 6%, a restaurant funded over 100% loan-to-value, and a Florida landscaper’s $2M property-purchase-plus-refi-plus-working-capital deal.
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What’s the main difference between an SBA 504 and an SBA 7(a) loan for real estate?
An SBA 504 loan is structured specifically for fixed assets — about 50% from a bank, about 40% from a CDC via an SBA-backed debenture at a fixed rate, and about 10% from the borrower — and it can only be used for property or major equipment. An SBA 7(a) loan is a single, flexible note with a variable rate that can combine the real estate with working capital, debt refinancing, or a business acquisition, often with little or no down payment.
Which has the lower down payment, 504 or 7(a)?
SBA 7(a) can go further — through the lenders Radix works with, over 100% loan-to-value is available, which can mean little or no money down for a qualified borrower. SBA 504 typically requires around 10% down (sometimes more for startups or special-use property).
Which has the lower interest rate?
The CDC portion of an SBA 504 loan carries a long-term fixed rate — roughly 6.8% to 8% through Radix’s lenders — which is often lower than the variable rate on an SBA 7(a) real-estate loan (about 6.8% to 11.25%, Prime plus margin). The 504 also locks that rate in, where the 7(a) rate floats. Radix’s non-SBA owner-occupied program runs from about 6.5%.
Do I have to occupy the property to use an SBA loan for it?
Yes — for both SBA 504 and SBA 7(a), the borrowing business must occupy at least 51% of the property. These programs are for owner-occupied commercial real estate, not investment property. The non-SBA owner-occupied program also requires owner occupancy and uses the property as collateral.
Can I use an SBA 504 loan for working capital?
No. SBA 504 proceeds must go to fixed assets — owner-occupied real estate, major equipment, construction, or substantial renovation. If you need working capital alongside a property purchase, an SBA 7(a) loan, which can combine both in one note, is the route.
How long does it take to close an SBA real estate loan?
Typically 6 to 10 weeks for a 504, 7(a), or non-SBA owner-occupied loan, because all three require a commercial appraisal and a Phase I environmental report ordered from independent firms. Ordering those reports early is the biggest thing you can do to keep the deal on the faster end.
Is there an SBA option that skips the SBA process?
Yes — Radix works with lenders that fund owner-occupied commercial real estate without an SBA guarantee: rates from about 6.5%, 25-year terms, up to 80% LTV, available in 23 states, with the property as collateral and a global debt-service ratio of 1.25 or higher required. It’s faster and lighter on paperwork in exchange for a larger down payment and a smaller geographic footprint.
Can I combine buying a building with buying a business?
Yes — this is a classic SBA 7(a) use. A single 7(a) loan can cover the business acquisition price, the real estate, and working capital, on a term up to 25 years (provided at least half the proceeds are tied to the real estate to keep the full term).
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Radix Financial Group and its affiliates are not lenders participating in SBA’s 7(a) loan program. Radix is a marketplace to help business owners obtain SBA 7(a) loans. Said loans are ultimately processed and approved by a lender participant in SBA’s 7(a) loan program.