Myth #1: “504 Loans are only for large, established businesses.”
Fact: The SBA 504 loan is specifically designed for small businesses. In fact, SBA defines a small business based on net worth (under $20 million) and average net income (under $6.5 million after taxes). That includes most privately held companies in the U.S.
From a one-location bakery to a growing manufacturing firm, 504 loans will align with your needs. We have financed projects under $500,000 and others over $10 million.
Real-life example:
- We helped a family-run funeral home purchase a $475,000 building > with only 10% down!
Myth #2: “504 Loans take too long and are overly complicated.”
Fact: It’s true that SBA requires some extra documentation, however at Success Capital we help make the process as simple as we can. With our electronic application, secure document portal, and experienced team we can close 504 loans in as little as 45 to 60 days – especially when the borrower is responsive. Note: Timelines may vary depending on the third-party lender and SBA Approval Center processing times.
Advantage: You have two expert teams working for you – your bank/credit union lender and Success Capital – ensuring a great outcome.
Best Practice for Borrowers: Providing full tax returns, financial statements dated within 60 days of the application – help us close faster.
Myth #3: “Startups can’t get approved for a 504 Loan.”
Fact: Startups are eligible if they are supported by a strong ownership team with experience and a detailed business plan.
The only exception is that startups require a 15% down payment instead of 10% and must show the ability to repay with projections and business plan/feasibility study. If you’re launching your first location, we’re happy to guide you through prequalification.
Startup Example: A new company, with strong ownership and management experience, wanted to operate an in-house event center. The new company was able to purchase the building with an SBA 504 loan. This company had a detailed business plan and projections.
Myth #4: “504 Loans are only for real estate purchases.”
Fact: While commercial real estate is the most common use of an SBA 504 loan, they can also be used for:
- Large equipment purchases (e.g., manufacturing, printing, medical)
- Ground-up construction
- Major renovations or expansions
- Energy efficiency upgrades – which can even qualify for increased > loan limits!
SBA 504 loans allow businesses to refinance their variable or high-interest rate commercial real estate debt with a LOW-FIXED RATE! With expansion and/or without expansion.
Without expansion program – allows businesses to pull cash-out for eligible business expenses (i.e., salaries, rent, credit card debt, etc.) up to 18 months.
Refinance with expansion – allows businesses to refinance their current commercial real estate up to 100% of the expansion costs – expansion costs may include purchasing another building or construction. Allowing borrowers and businesses to use their equity as their down payment and saves their working capital.
Real life examples:
- We helped finance equipment for a walnut processor for $2,578,400
- We helped a tire dealership refinance their variable SBA 7(a) loan > and they were able to save over $4,000 a month on their mortgage > payments plus they now have a low-fixed rate!
Myth #5: “You need a BIG down payment.”
Fact: One of the most borrower-friendly aspects of the 504 loan is the low-down payment of 10%. Compare that to 20–30% for conventional financing this helps preserve working capital and cash flow, which is critical for growing businesses. And… unlike some conventional loans, SBA 504 terms are fully amortized with NO balloon payments!
Myth #6: “Rates are too high.”
Fact: The SBA 504 rate is one of the lowest long-term fixed rates available to small businesses. As of July 2025, the 25-year effective rate is 6.37%, fixed for the life of the loan! (rates are set at the time of loan funding)
That means no surprises, no resets, and no prepayment penalties after the 10th year.
Myth #7: “You can only have one SBA 504 loan.”
Fact: Borrowers can have multiple SBA loans with the maximum loan amount outstanding at $5,000,000 (per borrower). However, if utilizing the Eligible Energy Public Policy, then the maximum total outstanding SBA 504 loan amount is $16,500,000. The key is meeting eligibility and credit requirements for each loan.
Real life example:
- We helped a hotel franchise with multiple locations, and they were > able to utilize the SBA 504 program to its max!
Myth #8: “504 loans are only for owner-occupied properties”
Fact: It’s true SBA 504 loans require at least 51% owner occupancy for existing buildings (or 60% for ground-up construction). But that still leaves room for rental income! Businesses can occupy most of the space and lease out the rest, which can help offset operating expenses and improve cash flow. Note: Business must qualify without the additional lease/rental income.
Real life example:
- We helped a CPA firm with the purchase of a 2-story building of > which the company occupied the 1st floor and the basement for > storage – which helped them meet the minimum 51% occupancy!
Myth #9: “Success Capital only does loans in the Central Valley.”
Fact: While we are proudly based in the Central Valley and love serving our local community, Success Capital can finance SBA 504 loans ANYWHERE in California!
We partner with lenders and borrowers from Northern California all the way to Southern California.
