The 25-Year Fixed SBA 504 Loan: What You Need to Know

The SBA 504 loan program enables business owners to access long-term, fixed-rate financing on owner-occupied commercial real estate and capital asset equipment. Previously, the 504 program offered 10- and 20-year terms to entrepreneurs purchasing property or machinery to grow or power their enterprises. However, in 2018, the federal government announced the first significant change to the SBA 504 loan initiative in over 30 years: the fixed 25-year term.

Understanding the Details of the 25-Year SBA 504 Program

Does a 25-year fixed 504 loan make sense for your organization? Understanding some of the specific requirements and benefits of this new SBA financing option can help you make the right choice for your business. Some key factors of the program include:

Loan Use

Much like the 10- and 20-year options, the 25-year SBA 504 plan can be used for purchasing capital asset equipment, owner-occupied real estate, and commercial buildings. The loan can also be used for new construction or improvements on an existing building.



To qualify for this 25-year, government-backed small business loan, a business must meet the following requirements:

  • Fewer than 100-1,500 employees (based on industry) or
  • An annual revenue lower than $750,00-$38.5 million (based on industry) or
  • Less than $5 million in net annual income or $15 million in net worth

Available Loan Amounts

The SBA 25-year loan model offers businesses access to capital ranging anywhere from $125,00 up to $20+ million.


Fee Structure

The fee structure for the 25-year option aligns with the 20-year financing model. Additionally, the voluntary prepayment schedule remains the same across both options, offering borrowers access to capital with no prepayment penalty after 10 years.

The 25-Year SBA Loan Offers Similar Benefits to Other Program Options  

Beyond a similar fee structure, the SBA 504 25-year loan initiative offers a wide range of benefits to borrowers, including:

Low (Fixed) Interest Rates

The assigned interest rates on small business loans are highly competitive. Much like other financing options, your final approved rate is contingent upon your credit status and other credentials. However, most business owners find they can secure financing at a much lower rate than offered by other lending models. 

Availability of Capital

The recession of 2008 has put extensive restrictions on financing in general, making it exceptionally challenging for small businesses to access the capital they need for growth. The 25-year SBA 504 program helps level the playing field between small and large enterprises, ensuring you have fast access to the funds you need to build your business. 

Longer Repayment Terms

Finally, a 25-year fixed-rate SBA loan helps make the repayment process as convenient as possible for borrowers. You can leverage the funding from the loan and enjoy a payment schedule that minimizes financial strain on your organization’s existing corporate cash flow.

Avid Commercial offers 10- 20- and 25-year SBA 504 loans to help small businesses and start-ups across every industry thrive. Contact us today to learn more.

Contact Avid Comercial Today

Avid Commercial develops low cost, flexible financing solutions to business owners across every industry. Our team of lending experts can help you grow your business, without depleting mission-critical cash reserves. Contact us today to learn more about our diverse product and service mix.

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