By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions
A $10 million SBA 504 industrial owner-user acquisition is one of the most leveraged executions available to small and mid-market business owners in commercial real estate. The 504 structure layers a 50 percent bank first mortgage with a 40 percent CDC second lien at the SBA debenture rate (one of the lowest fixed-rate options small business owners can access) with a 10 percent down payment from the borrower. The result is 90 percent LTC at a blended fixed-rate cost of capital below most conventional alternatives.
Get a Quote on Your $10M Deal →A typical $10M SBA 504 industrial owner-user capital stack consists of a $5M bank first mortgage at conventional bank pricing (typically 5 to 10 year fixed), a $4M CDC second lien at the SBA debenture rate (10, 20, or 25 year fixed), and $1M of borrower down payment. The blended cost of capital on the bank-financed portion is materially below standalone bank conventional financing.
Pricing reflects active CLS CRE quote pipeline as of April 2026. Specific deal pricing depends on sponsor, property, and structure.
Typical $10M SBA 504 industrial owner-user sponsors are mid-market manufacturers, distributors, food processors, and service businesses with $3M to $30M of trailing 12-month revenue and 10 to 200 employees. The owner is typically the operating CEO or family principal. Net worth $1M to $10M; liquidity $200K to $2M. The acquisition typically replaces a leased facility with owner-occupied real estate, providing 90 percent LTC financing, long-term fixed-rate cost certainty, and operating equity build-up.
On a $10.2M industrial acquisition in Long Beach, California, the buyer was a 25-employee specialty manufacturing operator with 18 years of operating history, transitioning from a leased 32,000 square foot facility to ownership of a 38,000 square foot purpose-built industrial building. The deal allocated $9.8M to real estate (the building, land, and site improvements) and $400K to equipment. SBA 504 financed at 90 percent LTC with a $5M bank first mortgage at 6.95 percent fixed 10-year and a $4M CDC second lien at 5.85 percent fixed 25-year. The borrower equity of $1M was funded through retained earnings. Total project cost $10.2M; blended monthly debt service approximately $52K versus prior monthly lease cost of $48K, with the additional $4K per month creating principal pay-down and equity build-up rather than rent expense.
Anonymized. All deal references protect borrower and lender identity.
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