The quick read: The financing route sets the minimum down payment on a building your business will occupy. An SBA 504 loan requires at least 10 percent of project cost, 15 percent if the business has operated two years or less or the building is limited or single purpose, and 20 percent if both apply, under 13 CFR 120.910. 7(a) lenders, banks and credit unions set their own figure within SBA policy or federal rules, with the federal interagency guidelines saying a bank's internal loan-to-value limit on improved property should not exceed the 85 percent supervisory limit, and seller financing is negotiated.
As of: September 24, 2026 (SBA pages and regulation text read that day; eCFR text up to date as of September 22, 2026)
SBA 504, standard: at least 10% of project cost (13 CFR 120.910; U.S. Small Business Administration)
SBA 504, business operating two years or less, or a limited or single purpose building: at least 15% (13 CFR 120.910)
SBA 504, both conditions: at least 20% (13 CFR 120.910)
SBA 7(a), start-up in operation one year or less: at least 10% of total project costs (SBA SOP 50 10 8)
Bank supervisory loan-to-value limit, improved property: 85% of the lesser of price or appraisal (12 CFR Part 34, Appendix A to Subpart D)
Illustrative $2 million purchase: $200,000 to $400,000 down with SBA 504; at least $300,000 for a bank loan at the 85% limit
How much do you need down with each financing route?
Your minimum down payment depends on which route finances the building: SBA 504 fixes it by regulation at 10, 15 or 20 percent of project cost, while 7(a) lenders, banks and credit unions set their own figure inside SBA policy or federal rules, and a seller-financed share is whatever the seller agrees to carry.
Table: Minimum down payment by financing route (rules read September 24, 2026)
| Route | Published minimum down payment | What raises it | Source, date read |
|---|---|---|---|
| SBA 504 (bank first lien plus CDC debenture) | At least 10% of project cost | 15% for a business operating two years or less or a limited or single purpose building; 20% for both | 13 CFR 120.910 on eCFR, SBA lender resources and SBA SOP 50 10 8, read Sep 24, 2026 |
| SBA 7(a) | No regulatory percentage for an established business; at least 10% of total project costs for a start-up in operation one year or less | The lender's or SBA's review of equity and pro forma debt-to-worth | 13 CFR 120.150 and SBA SOP 50 10 8, read Sep 24, 2026 |
| Conventional bank | Set by the bank's lending policy; at the 85% supervisory limit for improved property, at least 15% of value | Value is the lesser of price or appraisal; the bank's own limit can be lower | 12 CFR Part 34, Appendix A to Subpart D, read Sep 24, 2026 |
| Credit union | Set by its board-approved commercial loan policy, which must include loan-to-value limits | The policy's collateral-evaluation method | 12 CFR 723.4, read Sep 24, 2026 |
| Seller financing | No published minimum; negotiated | Whether the senior lender or CDC accepts a subordinate seller note | 13 CFR 120.912 on borrowed 504 contributions, read Sep 24, 2026 |
Read each row as a floor, not a quote: a lender or CDC can ask for more than the published minimum.
How do the SBA 504 step-ups to 15 and 20 percent work?
SBA 504 raises the borrower's minimum contribution from 10 to 15 percent of project cost when the business has operated for two years or less or the project involves a limited or single purpose building or structure, and to 20 percent when both conditions apply, according to 13 CFR 120.910.
The age test looks at the operating business. If the borrower is a holding company that owns the building and leases it to your operating company, which SBA calls an Eligible Passive Company, 13 CFR 120.910 counts the two years for the Operating Company.
The building test turns on classification. SBA's SOP 50 10 8 defines a limited or special purpose property as "a limited-market property with a unique physical design, special construction materials, or a layout that restricts its utility to the use for which it was built." Its examples include car wash businesses, gas stations, hotels and motels, funeral homes with crematoriums, wineries, and hospitals, surgery centers and urgent care centers. The list is not all-inclusive, so ask the CDC how it will classify your building before you sign a contract: that answer can move your contribution by five percentage points.
The contribution can be cash, property acceptable to SBA obtained with the cash, or land that is part of the project, from "a CDC or any other source except an SBA business loan program" (13 CFR 120.910), so a 7(a) loan cannot fund it. It can be borrowed: 13 CFR 120.912 says "the Borrower may borrow its cash contribution from the CDC or a third party" at a reasonable rate, and a loan secured by project assets must be subordinate to the 504 liens and may not be repaid faster than the 504 loan without SBA's prior written approval.
Occupancy rules, loan limits and pricing are covered in the SBA 504 program guide; this page stays on the cash you bring.
What does an SBA 7(a) loan require as a down payment?
An SBA 7(a) loan sets no single down payment percentage in regulation for an established business buying its building: 13 CFR 120.150 requires the applicant to be creditworthy and lets lenders consider "where applicable any equity or collateral of the applicant," so the lender's credit analysis, not a published figure, decides how much you put down.
SBA's loan-origination manual adds a hard floor for start-ups. SBA's SOP 50 10 page lists version 8 as effective June 1, 2025 and version 8.1 as effective October 1, 2026, and both SOP 50 10 8 and SOP 50 10 8.1 treat a business "generating revenue from intended operations" for one year or less as a start-up that needs an equity injection of at least 10 percent of total project costs, meaning all costs required to become operational other than lines of credit and 504 loans.
For an established business, the SOP has the lender, on delegated loans, or SBA judge whether "the equity position, any required equity contribution, and the pro forma debt-to-worth are acceptable," weighing the type of business, management experience and local competition. No minimum percentage is fixed, so ask the lender for its equity requirement in writing.
Under the same SOP, a seller note counts toward a 7(a) equity injection only if it is on full standby, with no payments of principal or interest for the term of the 7(a) loan.
How do banks and credit unions set the down payment on a conventional loan?
Banks and credit unions set the down payment on a conventional building loan in their own written lending policies, under federal rules: the interagency guidelines say a bank's internal loan-to-value limit on improved property should not exceed the 85 percent supervisory limit, and NCUA's rule requires a federally insured credit union's commercial loan policy to include loan-to-value ratio limits.
The Interagency Guidelines for Real Estate Lending tell banks to "establish their own internal loan-to-value limits for real estate loans" that "should not exceed" supervisory limits, including 85 percent for improved property, a category the guidelines define to include loans secured by completed commercial property. That is a ceiling on the bank's policy, not a promise of 15 percent down; the guidelines also ask each bank's policy to set "minimum requirements for initial investment and maintenance of hard equity by the borrower," which is where your actual down payment is written.
Two details change the cash you bring. For a purchase, the guidelines define value as "the lesser of the actual acquisition cost or the estimate of value," so a low appraisal shrinks the loan and raises your down payment. And 85 percent is not absolute: the guidelines allow loans above the limits "in individual cases" on "the support provided by other credit factors," but "the aggregate amount of all loans in excess of the supervisory loan-to-value limits should not exceed 100 percent of total capital." Ask for the bank's internal limit on your property type.
Federally insured credit unions answer to 12 CFR 723.4, which requires a written, board-approved commercial loan policy addressing "the methods to be used in collateral evaluation, for all types of collateral authorized, including loan-to-value ratio limits." The rule sets no loan-to-value percentage, so ask for the limit the credit union's policy applies to an owner-occupied building.
For amortization, prepayment and guaranties on the conventional side, see Can a small business buy its building without an SBA loan?
Can seller financing lower the cash you need at closing?
Seller financing lowers the cash you need at closing only when the seller agrees to carry part of the price and your senior lender or CDC accepts the seller's note behind its loan; seller financing itself has no published down payment rule, so the amount, rate and term are negotiated between buyer and seller.
Each route treats a seller note differently. On a 504 loan it is a third-party loan, which 13 CFR 120.912 permits on the subordination and repayment terms above. On a 7(a) loan it counts toward the equity injection only on full standby. On a conventional loan, whether a seller's second lien is allowed, and whether the full down payment must still be cash, is a question for the lender's policy.
Treat seller financing as a negotiation, not an entitlement: a seller has no obligation to carry a note. Before you negotiate, ask the senior lender or CDC whether it will accept a seller note, whether the note must be subordinate or on standby, and whether any of it counts toward the required down payment.
What does the down payment look like on a $2 million building?
On an illustrative $2 million owner-occupied building purchase, the minimum down payment runs from $200,000 under a standard SBA 504 loan to $400,000 when a new business buys a limited or single purpose building, while a bank loan written at the 85 percent supervisory limit needs at least $300,000.
Assumptions: $2 million price; appraisal at or above the price; no other project costs; minimums, not quotes
SBA 504, established business, general-purpose building: $200,000 down (10%); up to $1,000,000 (50%) first lien and up to $800,000 (40%) CDC debenture under SBA's typical 504 structure
SBA 504, new business or limited or single purpose building: $300,000 down (15%)
SBA 504, both conditions: $400,000 down (20%)
SBA 7(a), start-up: at least $200,000 (10% of total project costs), more if other start-up costs are in the project
SBA 7(a), established business: set by the lender's equity analysis
Bank loan at the 85% supervisory limit: at least $300,000 down
Bank loan at the 85% limit with a $1,900,000 appraisal: the loan tops out at $1,615,000 and the down payment rises to $385,000
Credit union: set by the loan-to-value limit in its commercial loan policy
Seller financing: whatever share the seller carries and the senior lender accepts
The appraisal line is the one to plan for: at an 85 percent limit, every $100,000 the appraisal comes in below the contract price adds $85,000 to the cash a bank loan needs, because the guidelines measure loan-to-value against the lower of the two.
What changes the down payment besides the loan program?
Besides the loan program, four things move the cash you bring: what the percentage is measured against, whether the building is classified limited or special purpose, how long the business has operated, and how the lender reads your cash flow, working capital, debt and net worth.
What the percentage is measured against: a 504 percentage applies to project cost "excluding administrative costs" (13 CFR 120.910). 13 CFR 120.882 counts professional fees such as "title insurance, opinion of title, architectural and engineering costs, appraisals, environmental studies" as eligible project costs, so they enlarge the base. The SBA guarantee fee, funding fee, CDC processing fee, CDC closing fee and underwriters' fee do not: 13 CFR 120.883 says those administrative costs "are not part of Project costs, but may be paid with the proceeds of the 504 loan and the Debenture."
Classification and business age each add five points to a 504 contribution, as covered above.
Your credit: SBA's SOP calls the 504 contribution tiers "the minimums required by policy" and says more contribution or collateral may be appropriate for credit weaknesses such as marginal historical or projected cash flow, limited working capital, a recent significant increase in debt, a restricted or limited customer base, or limited or no net worth. Banks and credit unions apply their own policies to the same facts.
The down payment is not the whole check: closing costs outside the financed project, post-closing working capital and any reserve a lender requires come on top, so ask each lender or CDC for a sources-and-uses statement showing every dollar you must bring.
How do you get lenders competing for your building purchase?
You get lenders competing for your building purchase by putting one complete file, covering the contract, the business's financials and your occupancy plan, in front of several lender types at once, so each prices the same facts. Submit your building purchase as a guest to start.
YieldStack is a commercial mortgage brokerage, not a lender. It costs Zero upfront to submit a deal and review offers; YieldStack's broker fee is 0.50–1.00% of the loan amount and is paid only at closing. Every credit decision is made by the lender; YieldStack arranges the introductions and negotiates on the borrower's side, and no loan, rate, or closing is guaranteed.
A brokerage is one route, not a requirement: you can also apply directly to a bank, a credit union or a Certified Development Company. No intermediary can lower an SBA minimum or a lender's loan-to-value limit. For how owner-occupied loans are structured, see owner-occupied commercial real estate loans.
The bottom line
The financing route sets the minimum down payment on a building your business will occupy. SBA 504 fixes it at 10, 15 or 20 percent of project cost under 13 CFR 120.910, depending on the business's age and the building's classification. SBA 7(a) sets a 10 percent floor for start-ups under SOP 50 10 and otherwise leaves the figure to the lender's or SBA's equity review. Banks and credit unions write it into their own policies, and the interagency guidelines say a bank's internal loan-to-value limit on improved property should not exceed an 85 percent supervisory limit measured on the lesser of price or appraisal. Seller financing is whatever the seller will carry and your senior lender will accept. On a $2 million building, that is $200,000 to $400,000 down with SBA 504 and at least $300,000 for a bank loan at the limit. Before you sign, get the CDC's classification, each lender's limit and a sources-and-uses statement in writing.