Answers ~5 min read Updated
How Much Is the Down Payment on an SBA Loan?
Most SBA loans need 10% down. SBA 504 loans need 10% to 20% depending on your business and building. Startups and business purchases need at least 10%, and a seller note can cover up to half of it.
Most SBA loans need about 10% down. For SBA 504 loans, it's 10% for an established business buying a general-purpose building, 15% for a new business or a special-purpose building, and 20% when both apply. Startups and business purchases under the 7(a) program must put in at least 10% of the total project cost.
That's the big reason owners choose SBA loans. A regular bank loan on the same building often needs 15% to 25% down, which ties up cash the business could use.
SBA down payments at a glance
| Loan and use | Typical down payment |
|---|---|
| 7(a) to buy a business | At least 10% of total project cost |
| 7(a) for a startup | At least 10% of total project cost |
| 7(a) for an existing business (equipment, real estate, working capital) | Set by the lender, often 10% to 20% |
| 504, established business, general-purpose building | 10% |
| 504, new business or special-purpose building | 15% |
| 504, new business and special-purpose building | 20% |
"Total project cost" means everything the loan pays for, not just the purchase price. On a business purchase, that includes closing costs, working capital, and fees that get financed.
Where the down payment can come from
- Your own cash and savings. This is what lenders like most.
- A seller note, for up to half. If you're buying a business, a seller note can cover up to half of the required 10%, but only if it's on full standby: no payments for the life of the SBA loan.
- Gifts, with a signed gift letter and proof of where the money came from.
- Equity in an existing business or property, in some cases. Ask your lender.
Borrowed money, like a HELOC, usually doesn't count unless you can show other income that pays it back.
Example: buying a $1,000,000 business
- Total project cost, including closing costs and working capital: $1,100,000
- Required 10% down payment: $110,000
- Seller note on full standby can cover up to: $55,000
- Your own cash, at least: $55,000
- SBA 7(a) loan: $990,000
Use the loan payment calculator to see what that loan costs each month. For the full rules on buying a business, read SBA loans to buy a business.
Common questions
What is the minimum down payment for an SBA loan?
For most SBA loans it's 10%. Startups and business purchases under the 7(a) program must put in at least 10% of the total project cost. SBA 504 loans need 10%, 15%, or 20% depending on the age of the business and the type of building.
Can a seller note count toward my SBA down payment?
Yes, for part of it. A seller note can cover up to half of the required down payment if it is on full standby, meaning no payments, for the life of the SBA loan. The rest must be your own money.
Can I use a HELOC or borrowed money for my SBA down payment?
Usually not, unless you can show income outside the business that pays the borrowed money back. Lenders want to see that the down payment is truly your own money at risk.
Is the SBA down payment lower than a regular bank loan?
Usually, yes. Conventional commercial real estate loans often need 15% to 25% down, and more for special-purpose buildings. SBA programs commonly need 10%.