SBA 504 Loans Michigan | Commercial Real Estate & Equipment Financing | 10% Down | Fixed Rates
Purchase Commercial Real Estate or Major Equipment with Just 10% Down and Fixed Rates for 25 Years
Stop paying rent. Start building equity. SBA 504 loans for Michigan businesses.
✓ 10% Down ✓ Fixed Rates ✓ 25 Years ✓ No Balloon
📞 (855) 998-5874 | ✉️ hello@sbaloansmichigan.com
SECTION 1: WHAT ARE SBA 504 LOANS IN MICHIGAN?
SBA 504 loans provide Michigan businesses with long-term, fixed-rate financing for purchasing commercial real estate and major equipment. Unlike conventional commercial loans or SBA 7(a) loans, the 504 program offers the lowest down payments, longest fixed-rate terms, and most stable monthly payments available for owner-occupied properties.
For Michigan businesses in Metro Detroit, Grand Rapids, Ann Arbor, Lansing, and throughout the state, SBA 504 loans have become the preferred financing for commercial real estate—whether you're a manufacturing company buying a production facility in Sterling Heights, a medical practice purchasing an office building in Grand Rapids, or a distribution company acquiring a warehouse in Lansing.
SBA 504 loans are structured with three funding sources:
A bank provides 50% of the project cost
An SBA-backed lender provides up to 40%
Your business contributes at least 10% down payment
Total projects typically range from $250,000 to $20 million+, with the SBA portion capped at $5 million for standard projects and $5.5 million for Michigan manufacturing and energy-efficient projects.
Example structures:
$2M Office Building:
Bank loan: $1,000,000 (50%)
SBA portion: $800,000 (40%)
Down payment: $200,000 (10%)
$10M Manufacturing Facility:
Bank loan: $5,000,000 (50%)
SBA portion: $4,000,000 (40%)
Down payment: $1,000,000 (10%)
Why Michigan businesses choose SBA 504 loans:
✓ 10% down payment (vs. 25-35% conventional)
✓ Fixed rates for life (10, 20, or 25 years—zero rate risk)
✓ No balloon payments (fully amortized)
✓ Lower monthly payments (25-year terms)
✓ Preserves working capital (less cash required)
✓ Build equity (stop paying rent)
✓ Projects to $20M+ (SBA portion up to $5.5M)
SECTION 2: THE MICHIGAN SBA 504 LOAN MARKET IN 2025
Michigan businesses are using SBA 504 loans at record levels for commercial real estate purchases and equipment financing.
Current Michigan SBA 504 market conditions:
Average project size: $2.8 million
Typical down payment: 10-15%
Fixed rates: Currently 5.5-6.5% (SBA portion)
Most common use: Commercial real estate purchases
Top industries: Manufacturing, healthcare, retail, distribution
Michigan's top SBA 504 project types:
Manufacturing facilities (Michigan's largest 504 category)
Medical and dental office buildings
Warehouses and distribution centers
Retail buildings and storefronts
Office buildings for professional services
Geographic concentration: Metro Detroit leads Michigan in 504 loan volume, followed by Grand Rapids, Ann Arbor, Lansing, and West Michigan markets.
SECTION 3: WHAT CAN YOU USE SBA 504 LOANS FOR?
SBA 504 loans can ONLY be used for real estate and equipment—not business acquisitions or working capital.
Commercial Real Estate (Primary Use)
✓ Office buildings – Purchase buildings for your business operations
✓ Manufacturing facilities – Industrial buildings, production facilities
✓ Warehouses – Distribution centers, storage facilities
✓ Retail buildings – Storefronts, shopping centers
✓ Medical offices – Dental practices, physician offices, veterinary clinics
✓ Mixed-use properties – Must occupy 51%+ for your business
✓ New construction – Build your facility from ground up
✓ Major renovations – Purchase and renovate existing buildings
Owner-occupancy requirement: You must occupy at least 51% of the property for your own business. You can rent up to 49%.
Michigan examples:
Detroit manufacturing company purchases 40,000 sq ft facility
Grand Rapids medical practice buys office building
Ann Arbor retailer acquires downtown storefront
Lansing distributor purchases warehouse
Major Equipment & Machinery
✓ Manufacturing equipment – CNC machines, production lines, industrial machinery
✓ Heavy construction equipment – Excavators, cranes, specialized trucks
✓ Medical equipment – MRI machines, CT scanners, surgical equipment
✓ Food processing equipment – Commercial kitchens, packaging machinery
✓ Material handling systems – Forklifts, conveyors, warehouse systems
Equipment must have useful life of 10+ years.
What You CANNOT Use 504 For
❌ Business acquisitions (use SBA 7(a))
❌ Working capital (use SBA 7(a))
❌ Inventory
❌ Debt refinancing (unless with major expansion)
❌ Investment properties (passive real estate)
SECTION 4: SBA 504 VS. SBA 7(a) VS. CONVENTIONAL – MICHIGAN COMPARISON
Choose SBA 504 When:
✓ Purchasing real estate or equipment only
✓ Want fixed rate for 10-25 years
✓ Don't need working capital
✓ Project is $1M+
✓ Want lowest possible payment
Choose SBA 7(a) When:
✓ Acquiring a business or franchise
✓ Need working capital with real estate/equipment
✓ Want faster closing (2-4 weeks quicker)
✓ Project under $1M
✓ Want maximum flexibility
Choose Conventional When:
✓ Have 30%+ cash for down payment
✓ Perfect credit and financials
✓ Want fastest closing
✓ Accept balloon payment risk
Example: $3M Michigan Building
SBA 504:
Down: $300K (10%)
Payment: ~$19K/month
Fixed 25 years
No balloon
Conventional:
Down: $900K (30%)
Payment: ~$21K/month
Balloon after 7-10 years
Rate adjusts
504 saves $600K down payment + $2K/month
SECTION 5: SBA 504 REQUIREMENTS FOR MICHIGAN BUSINESSES
Basic Eligibility
✓ 2+ years in business (tax returns required)
✓ Profitable with positive cash flow
✓ Personal credit 650+ (680+ preferred)
✓ Occupy 51%+ of property (for your business)
✓ U.S.-based for-profit business
Financial Requirements
✓ Net worth under $15M
✓ Net income under $5M (after taxes)
✓ Strong cash flow (1.20x+ debt coverage)
Down Payment
Standard: 10%
Special purpose (gas stations, hotels): 15-20%
New businesses: 15%
Property Requirements
Owner-occupancy: Must occupy 51%+ for your business operations.
Works:
You occupy 100% ✓
You occupy 60%, rent 40% ✓
You occupy 51%, rent 49% ✓
Doesn't work:
You occupy 40%, rent 60% ✗
Investment property, no occupancy ✗
Credit Requirements
Personal credit: 650+ minimum, 680+ preferred
Business credit: Strong business credit helps
Can overcome:
Past late payments (if resolved)
Prior bankruptcies (2+ years discharged)
Collections/judgments (if paid)
Harder to overcome:
Recent bankruptcies
Current liens or judgments
Recent foreclosures
SECTION 6: SBA 504 LOAN TERMS, RATES & STRUCTURE FOR MICHIGAN
Loan Structure
Every SBA 504 loan has three parts:
Bank Loan (50%):
First lien on property
Variable or fixed rate
20-25 year term
Current rate: 6-8%
SBA Portion (40%):
Second lien on property
Fixed rate for life
10, 20, or 25 year term
Current rate: 5-6.5%
Your Equity (10%+):
Down payment
Cash, seller financing, or equipment
Interest Rates in Michigan
Current SBA 504 rates (Q4 2025):
Bank portion: 6-8%
SBA portion: 5.5-6.5% fixed
Combined effective rate: ~6-7%
Compare to:
Conventional commercial: 8-12%
SBA 7(a): 9-11%
Rate advantages:
SBA portion fixed for life (zero rate risk on 40%)
Lower overall rate than conventional
Predictable payments for 25 years
Repayment Terms
Real estate: 20 or 25 years (25 most common)
Equipment: 10 or 20 years (based on useful life)
Fully amortized—no balloon payments
Example $3M project, 25 years:
Bank payment: ~$10,600/month
SBA payment: ~$5,900/month
Total: ~$16,500/month
Project Sizes
Minimum: $250K practical minimum
Maximum: $20M+ total (SBA portion capped at $5-5.5M)
Typical Michigan projects:
Small: $500K-$1.5M
Medium: $1.5M-$5M
Large: $5M-$15M
Mega: $15M+
Example large project: $18M facility:
Bank: $9M (50%)
SBA: $5.5M (capped)
Equity: $3.5M (19.4%)
Fees & Costs
Processing fee: 1.5-2.5% of SBA portion
Bank costs: $3K-$10K
Third-party: $10K-$25K (appraisal, environmental, survey, title, legal)
Total closing costs: 2-4% of project
Example $3M project:
Processing: $24K
Bank: $5K
Third-party: $15K
Legal: $5K
Total: $49K (1.6%)
Usually rolled into financing.
SECTION 7: THE SBA 504 PROCESS FOR MICHIGAN BUSINESSES
Timeline: 60-90 days
Step 1: Consultation (Days 1-7)
Discuss property/equipment needs
Review qualifications
Determine 504 fit
Explain structure
Step 2: Documentation (Days 8-21)
Gather financials (2 years tax returns, statements)
Prepare business plan
Order appraisal and environmental
Package application
Step 3: Underwriting (Days 22-50)
Bank reviews and approves
SBA-backed lender reviews
Both coordinate
Approvals issued
Step 4: SBA Authorization (Days 51-75)
SBA authorizes loan
Closing docs prepared
Final conditions satisfied
Step 5: Closing (Days 76-90)
Documents signed
Funds disbursed
You take ownership
What you provide:
2 years business tax returns
2 years personal tax returns
Financial statements
Personal financial statement
Purchase agreement
Business plan
We handle everything else.
SECTION 8: MICHIGAN INDUSTRIES USING SBA 504 LOANS
Manufacturing (Michigan's #1 504 Category)
Michigan manufacturing companies use 504 for facilities, expansions, and equipment.
Special advantages:
$5.5M SBA portion (vs. $5M standard)
Job creation benefits
Equipment + real estate in one package
Example: Sterling Heights automotive supplier bought 50,000 sq ft facility + equipment for $8M, 10% down, doubled capacity.
Healthcare & Medical Practices
Medical offices, dental practices, veterinary clinics purchase buildings.
Why 504 works:
Stop paying rent
100% owner-occupied
Fixed rates = predictable costs
Build equity
Example: Grand Rapids medical practice purchased 12,000 sq ft building for $2.4M, cut occupancy from $22K/month rent to $15K/month payment.
Retail & Restaurants
Stores, restaurants, franchises purchase storefronts.
Benefits:
Lock in prime locations
Control renovations
Build equity vs. renting
Example: Ann Arbor restaurant acquired downtown building for $1.8M, eliminated $15K/month rent, secured location permanently.
Distribution & Warehouses
Distribution centers, logistics companies purchase warehouses.
Why 504:
Large buildings ($3M-$10M+) fit structure
Equipment included
Fixed rates provide stability
Example: Lansing distributor bought 80,000 sq ft warehouse for $5.5M, consolidated three leased locations, cut costs 35%.
Professional Services
Law firms, accounting, engineering purchase offices.
Advantages:
Stable cash flow = easy approval
100% owner-occupied
Tax benefits of ownership
Example: Metro Detroit law firm purchased office building for $2.4M, rented extra space, net cost dropped 49%.
SECTION 9: MICHIGAN SBA 504 SUCCESS STORIES
Manufacturing – Sterling Heights
Business: Precision metal fabrication, $8M revenue
Challenge: Outgrew leased 35,000 sq ft, needed owned space
Solution: $7.2M SBA 504 loan
Total: $8M (facility + equipment)
Down: $800K (10%)
Payment: $50,700/month
Result: Moved to 65,000 sq ft owned facility, revenue grew to $13M in 18 months, added 28 jobs, building appreciated $1.2M.
Medical Practice – Grand Rapids
Business: Multi-physician practice, $4.5M revenue
Challenge: Paying $32K/month rent, landlord selling
Solution: $3.6M SBA 504 loan
Building + improvements: $4M
Down: $400K (10%)
Payment: $25,300/month
Result: Saved $6,700/month ($80K annually), built $400K equity in 5 years, controlled facility.
Distribution – Lansing
Business: Industrial distributor, $6M revenue
Challenge: Leased warehouse, high rent, inadequate space
Solution: $4.8M SBA 504 loan
Warehouse + equipment: $5.3M
Down: $533K (10%)
Payment: $33,800/month
Result: Consolidated three locations, saved $8,200/month, doubled inventory, revenue hit $9.2M.
SECTION 10: SBA 504 FAQS – MICHIGAN
Can I use 504 to buy a business?
No. 504 is only for real estate and equipment. Use SBA 7(a) for business acquisitions.
Can I include working capital?
No. 504 is strictly real estate and equipment. Use SBA 7(a) if you need working capital.
Can I rent part of my building?
Yes, as long as you occupy 51%+ for your business. You can rent up to 49%.
How long to close?
60-90 days typically.
What credit score needed?
680+ preferred, 650-680 possible with strong financials.
Can I refinance existing mortgage?
Generally no, unless combined with substantial expansion (15-20%+ new investment).
What if declined by a bank?
One decline doesn't mean you don't qualify. Different lenders have different criteria. We know which to approach.
Can startups get 504?
Difficult. Need 15% down, strong experience, 700+ credit, comprehensive plan.
SECTION 11: READY TO PURCHASE YOUR MICHIGAN COMMERCIAL REAL ESTATE?
Stop paying rent. Stop building someone else's equity. Stop worrying about lease renewals.
Start building wealth and owning your business future.
SBA 504 loans provide Michigan businesses with 10% down, fixed rates for 25 years, and no balloon payments.
Get Started:
📞 Call: (855) 998-5874
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✉️ Email: hello@sbaloansmichigan.com
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📝 Fill Out Form Above
Free quote in 24 hours
Within 24 hours:
✓ Know if you qualify
✓ Estimated structure and payments
✓ Timeline to closing
Within 60-90 days: You own your property.
SBA Loans Michigan
Michigan's #1 SBA Loan Platform
📞 (855) 998-5874
✉️ hello@sbaloansmichigan.com
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