Last reviewed October 19, 2026 · 6 min read
For many operating businesses, owning their building provides stability and long-term control over occupancy costs. SBA programs are designed specifically for owner-occupied property.
What “owner-occupied” means
Under SBA programs, the operating business generally must occupy at least 51% of an existing building, or 60% for new construction, with additional limits on the portion that can be leased to others. Passive investment and rental real estate are not eligible.
Financing options
- SBA 504: a lender first-lien loan plus a CDC second loan with a long-term fixed rate on the CDC portion; typically requires a borrower contribution of at least 10%.
- SBA 7(a): can combine real estate with equipment, working capital, or an acquisition in a single loan.
- Conventional commercial mortgage: may be appropriate for borrowers with stronger equity positions or when SBA program features are not needed.
What lenders evaluate
- Business cash flow available to service the debt
- The property’s appraised value and condition
- Environmental review requirements for commercial property
- The borrower’s equity contribution
Program rules, debenture limits, and fees are set by the SBA and change over time. Your lender and CDC will confirm current terms.
Sources
This article is for general educational purposes and is not legal, tax, or financial advice. Sapphire Holdings is not a lender and is not affiliated with the U.S. Small Business Administration. Program rules change; confirm current requirements with your lender.