How Much Down Payment Do I Need for a Commercial Real Estate Loan?
SBA loans start at 10% down. Conventional commercial loans require 20–30%. Here’s exactly what to expect.
Most owner-occupied commercial real estate purchases through the SBA require as little as 10% down. Conventional commercial loans typically require 20–30%. The exact amount depends on your loan program, property type, and how long your business has been operating.
Down Payment by Loan Type
| Loan Type | Minimum Down | Notes |
|---|---|---|
| SBA 504 | 10% | 15–20% for special-use or startups |
| SBA 7(a) | 10% | Up to 20% depending on property |
| Conventional | 20–30% | Investment properties often 30%+ |
| Bridge Loan | 20–35% | Short-term transition financing |
What Counts as a Down Payment?
Your down payment can come from business savings, personal funds, seller financing, or equity in another property. Some lenders allow gifts or grants if properly documented. What cannot count: borrowed funds from another loan used specifically for the down payment.
Special-Use Properties Require More
Hotels, gas stations, car washes, and other special-purpose properties are harder to resell if the business fails — so lenders require 15–20% down even on SBA loans. This is standard industry-wide, not specific to any one lender.
Startup Businesses
If your business has been operating for less than two years, expect to put down 20–30% regardless of loan type. Lenders offset the higher risk of early-stage businesses with a larger equity cushion.
How to Reduce Your Down Payment
The most effective way is the SBA 504 program — its structure (50% bank, 40% CDC, 10% borrower) is specifically designed to maximize leverage for small business real estate purchases. Combining seller financing with an SBA loan is another strategy that experienced advisors can structure.
