SBA Loan Calculator
Compare an SBA 7(a) loan, an SBA 504 loan, and a conventional mortgage side by side for owner-occupied commercial real estate. Enter your numbers to see how each option compares on down payment, monthly payment, total interest, and the cash left available in your business. A conventional mortgage usually has a slightly lower rate, while an SBA loan usually needs a smaller down payment — this tool shows how those trade off.
In plain English
SBA loan vs conventional mortgage: how the trade-off works
When you buy owner-occupied commercial real estate, the biggest difference between an SBA loan and a conventional commercial mortgage is not the interest rate — it is the down payment. A conventional lender usually wants 20% to 30% down. An SBA 7(a) or 504 loan usually needs only about 10% down. On a $1,000,000 building, that difference alone keeps roughly $150,000–$200,000 in your business instead of locked in the walls.
The catch is honest: an SBA 7(a) rate is often slightly higher than a conventional rate, so the monthly payment and lifetime interest are larger. This is not “cheaper money” — it is “keep your money.” For most owner-occupiers, the cash preserved is worth far more working in inventory, staff, and growth than the extra interest costs. The calculator above shows the break-even point: how many years it takes for the higher SBA rate to eat up the cash you kept.
SBA 7(a) vs SBA 504: which one to use
- SBA 7(a) — one flexible loan that can roll real estate and working capital (or equipment, or debt refinancing) into a single blended payment. The rate is usually variable, tied to the Prime rate plus a spread of about 2.25%–2.75%. Best when you also want cash to run or grow the business.
- SBA 504 — for fixed assets like real estate and heavy equipment. It has the lowest, mostly-fixed blended rate, structured as a bank first mortgage (about 50%) plus a CDC/SBA second (about 40%) with 10% down. It cannot include working capital. Best for a real-estate-only purchase where you want the lowest long-term rate.
SBA down payment and eligibility basics
- Owner-occupancy: you must occupy at least 51% of an existing building (60% for new construction). You can lease the rest and keep the rent.
- Down payment: about 10% for standard property, 15%+ for special-purpose property (hotels, gas stations, car washes, etc.).
- Your own funds: the equity injection generally must be your own money and cannot be financed by the same loan.
- Fees: SBA guaranty and soft costs can usually be financed into the loan, so your out-of-pocket cash is mostly just the down payment.
How this calculator works
Each option is amortized with the standard loan formula:
where P is the amount financed (including any rolled-in fees), r is the monthly interest rate, and n is the number of monthly payments.
On the SBA 7(a) option, the real estate portion amortizes over your chosen term (up to 25 years) while the working-capital portion amortizes over up to 10 years, so the tool shows a blended monthly payment. Guaranty and soft-cost fees are estimated and financed into the loan. All figures are estimates for comparison and education only — confirm current Prime rate, SBA fees, and program rules with a lender before making decisions.
Frequently asked questions
How much down payment does an SBA loan require?
SBA 7(a) and 504 loans for owner-occupied commercial real estate typically require about 10% down, compared with 20% to 30% for a conventional commercial mortgage. Special-purpose properties such as hotels, gas stations, or car washes usually require 15% or more. The equity injection generally must be your own funds and cannot be financed from the same loan.
What is the difference between an SBA 7(a) and an SBA 504 loan?
An SBA 7(a) loan is a single, flexible loan that can combine real estate with working capital, equipment, or debt refinancing into one blended payment, usually at a variable rate tied to Prime. An SBA 504 loan is for fixed assets like real estate and heavy equipment, offers a low, mostly fixed blended rate, and cannot include working capital.
Is an SBA loan cheaper than a conventional mortgage?
Not always on rate. An SBA 7(a) rate is often slightly higher than a conventional mortgage, while SBA 504 rates are frequently lower. The main advantage of SBA financing is the much smaller down payment, which lets you keep more cash working in your business. This calculator shows the trade-off between a lower conventional rate and the cash an SBA loan preserves.
Can I use an SBA loan to buy commercial property?
Yes, if the property is owner-occupied. The SBA generally requires you to occupy at least 51% of an existing building or 60% of new construction. You can lease the remaining space and collect rent on it. Pure investment properties are not eligible for SBA 7(a) or 504 financing.
How is the SBA loan monthly payment calculated?
The payment uses the standard amortization formula: Payment = P × r ÷ (1 − (1 + r)−n), where P is the amount financed including rolled-in fees, r is the monthly interest rate, and n is the number of monthly payments. On a 7(a) loan the real estate portion amortizes up to 25 years while any working capital amortizes up to 10 years, so the tool shows a blended monthly payment.
Related calculators
Estimates for illustration and education only — not a loan offer, commitment, or APR disclosure. Actual rates, fees, terms, eligibility, and down payment depend on the lender, the SBA, your credit and financials, and the property. SBA 7(a) working-capital and equipment portions amortize up to 10 years while real estate amortizes up to 25 years (shown here as a blended payment). The SBA equity injection generally must be your own funds and cannot be financed from the same loan. Verify current Prime rate, SBA fees, and program rules before making decisions.