How much is the SBA 504 down payment?
Under 13 CFR § 120.910, the minimum contribution is generally 10% of project cost, excluding administrative costs. It rises to 15% if the borrower or operating company has operated for two years or less, or if the project involves a limited or single-purpose building. When both conditions apply, it is 20%.
Those are program minimums. The final financing structure and lender review determine the cash required for your project.
A simple contribution example
For a hypothetical $1,000,000 project-cost base, 10% is $100,000; 15% is $150,000; and 20% is $200,000. These figures illustrate the contribution calculation only. They are not an estimate of your complete cash to close or an offer to finance a particular project.
What about an SBA 7(a) loan to buy a business?
Explain whether you are buying the entire business, purchasing a partial interest, or changing ownership within an existing business. Also identify any real estate, working capital, and seller financing included in the transaction.
Ask for the investment requirement for that specific structure before finalizing purchase terms. Do not assume a 504 percentage applies to a 7(a) acquisition, or that a seller note will automatically count toward your required contribution.
Down payment versus total cash needed
Build a cash plan with three separate lines: the required contribution, expenses paid outside the financed project, and cash remaining for operations. Ask which deposits or already-paid expenses can be considered and what evidence is needed.
A lower contribution is not the only measure of a workable financing plan. The business must still be able to manage its operating costs and debt payments after closing.
What to bring to the discussion
- The full proposed project budget and any purchase agreement.
- The business’s operating history and property type.
- The amount and source of available investment.
- Any seller note, gift, borrowed funds, or other proposed funding source.
- The cash you expect to retain after the transaction.
With those details, we can discuss the questions that need to be resolved before you rely on a cash-to-close estimate.