This guest article was contributed by Dakota Business Lending. We’re pleased to share their expertise on SBA 504 financing as part of our ongoing effort to provide useful insights to Montana’s business and property owners. The information reflects DBL’s deep experience in this space and is shared here for informational purposes.
You’ve got the vision, now you’re thinking about the space. Maybe it’s a shop of your own. A new facility. More room for your team, your tools, and your growth.
But one question stands…How do you pay for it?
To buy a building or expand you need financing that works…without draining your cash reserves or forcing you into risky terms. One option that’s made for this kind of move is the SBA 504 loan program.
How the SBA 504 Works
The SBA 504 loan program is built for business owners who want to buy, build, or renovate commercial real estate or purchase long-term equipment. If you’re looking at a space your business will operate from, whether it’s a warehouse, storefront, shop, or office, the SBA 504 program might be the answer.
The structure is simple:
- You bring a minimum of 10% down
- Your bank finances 50% of the project
- Dakota Business Lending (in partnership with the SBA) provides the final 40%
*the example above is a typical structure; exact breakdown may vary depending on project specifics
How does this help?
With a traditional bank loan, you’re often looking at higher down payments (sometimes 20% or more), which means more cash out of your pocket upfront. The SBA 504 structure keeps that down payment closer to 10%, leaving more of your money available to run and grow your business. Plus, while many commercial loans come with shorter terms and variable interest rates that can climb over time, the SBA 504 offers longer repayment terms (up to 25 years) and a below-market, fixed rate you can count on.
That means predictable payments, less financial strain, and a loan designed to support your business as it continues to grow.
Who Qualifies?
In general, you’re eligible if:
- You’re buying, building, renovating, or expanding commercial real estate.
- Your business is owner-operated: sole proprietorship, partnership, corporation, or LLC.
- You’ll occupy at least 51% of the property for existing buildings (or 60% for new construction).
- You’re a for-profit business.
- Your business has a net worth of <$20M and an average net profit of <$6.5M
Next Steps
If you’re thinking about buying or building property for your business, you don’t need to have all the answers. Reach out to your banker, your realtor, or another trusted partner and ask them about the SBA 504 loan program.
Or reach out directly to the Dakota Business Lending team to learn more. With over 43 years in SBA 504 lending, we’ll be able to learn about your project, answer your questions, and start mapping out a custom financing package for you. This package can include the SBA 504, our other Dakota Business Lending gap financing programs, local loan programs, and any other tools to help you reach your goals. And don’t worry – we’ll work with your banker, realtor, and other trusted partners along the way to explore every option and keep things moving forward.
Stay focused on growing your business, and let our team do the rest.
For more information:
Brandon Orr
Business Development / Commercial Loan Officer – Bozeman
borr@dakotabusinesslending.com
(406) 898-4856
Molly Bradford
Business Development / Commercial Loan Officer – Missoula
mbradford@dakotabusinesslending.com
(406) 540-5708
dakotabusinesslending.com/montana