SBA 504 Loan for Dental Practice Real Estate & Equipment
SBA 504 loans offer dental practice owners long-term, fixed-rate financing for commercial real estate and major equipment purchases. Unlike the 7(a) program, 504 loans provide below-market fixed rates and are specifically designed for owner-occupied commercial property and capital investments.
How SBA 504 Loans Work
The 504 program uses a unique three-party structure:
- Bank (50%): First mortgage at conventional rates
- CDC/SBA (40%): Fixed-rate second mortgage backed by SBA
- Borrower (10%): Down payment requirement
SBA 504 Benefits for Dentists
- Fixed Rates: Currently 5.5% - 6.5%
- Long Terms: 10, 20, or 25 years
- Low Down Payment: Just 10%
- Predictable Payments: No rate fluctuations
- Large Loan Amounts: Up to $5.5 million SBA portion
Eligible Uses for Dental Practices
Real Estate
- Commercial building purchase
- Construction of new facility
- Building renovation/expansion
- Land acquisition (with construction)
Equipment
- Digital radiography systems
- CAD/CAM technology
- Dental chairs and units
- Practice management software
- Other major equipment with 10+ year life
Current SBA 504 Rates & Terms
| Term | CDC Rate | Total Project Max |
|---|---|---|
| 10-year | ~5.5% | $15 million |
| 20-year | ~6.0% | $15 million |
| 25-year | ~6.25% | $15 million |
Application Requirements
- Credit score 680+
- Personal guarantee required
- Job creation/economic development
- Owner-occupied property
- Tangible net worth under $15 million
- Average net income under $5 million
504 vs 7(a) Comparison
| Feature | 504 Loan | 7(a) Loan |
|---|---|---|
| Best For | Real estate/equipment | Practice acquisition |
| Rate Type | Fixed | Variable |
| Rate Level | Lower | Higher |
| Structure | 50/40/10 | Single loan |
| Processing | 60-90 days | 45-75 days |
Conclusion
SBA 504 loans provide dental practice owners with exceptional financing for real estate and major equipment. The combination of fixed rates, long terms, and low down payments makes 504 loans ideal for practice expansion and facility ownership.
Considering real estate or major equipment purchase? Contact DentalBridge for SBA 504 lender referrals.