$3 Million SBA 504 Owner-User Real Estate Acquisition in California

By Trevor Damyan, Commercial Mortgage Broker at Commercial Lending Solutions

A $3 million SBA 504 owner-user real estate acquisition in California is one of the most leveraged executions available to small business owners purchasing their own 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 plus 10 percent borrower down payment.

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What a $3M SBA 504 Owner-User Capital Stack Looks Like

$3M SBA 504 owner-user acquisitions consist of bank first mortgage, CDC second lien, and borrower equity.

Capital Source Rate / Cost Size / LTV Notes
Bank first mortgage (SBA 504 1st) 6.85 to 7.85% (5-year fixed) $1.5M / 50% LTC Bank balance sheet underwritten
CDC second lien 5.85% fixed (25-year) $1.2M / 40% LTC Long-term fixed; no balloon
Borrower equity Equity contribution $300K / 10% LTC 20% required if special-purpose
Total SBA 504 Blended ~6.65% $3M / 90% LTC Equipment can be bundled

Pricing reflects active CLS CRE quote pipeline as of April 2026. Specific deal pricing depends on sponsor, property, and structure.

Who Closes a $3M SBA 504 Owner-User Deal

Typical $3M California SBA 504 sponsors are mid-market California operators (manufacturing, distribution, professional services, healthcare) transitioning from leased to owned facilities. California SBA volume is among the highest in the country.

A Real $3M Example

On a $3.2M owner-user industrial acquisition in a Los Angeles County market, the buyer was a 14-employee specialty manufacturer transitioning from a leased facility to ownership. SBA 504 at 90 percent LTC with $300K borrower equity from retained earnings.

Anonymized. All deal references protect borrower and lender identity.

$3M SBA 504 Owner-User California FAQ

The CDC second lien is capped at $5M ($5.5M for manufacturing or energy-efficient projects). With a 50 percent bank first mortgage, total project size can extend to $20M+ depending on bank lender appetite.
Yes. California is one of the most active SBA 504 markets in the country given the size of the small business economy and the value of owner-user real estate ownership.
Yes. All owners of 20 percent or more of the operating company must personally guarantee both the bank first lien and the CDC second lien.

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