The Short Answer
SBA 504 requires you to occupy 51%+ of the building as the operating business. Jumbo commercial loans (and DSCR investor loans) have no such rule. If you can meet the occupancy test, 504 typically wins on every other dimension: lower down payment, longer fixed rate, lower blended cost.
Side-by-Side
| Factor | SBA 504 | Jumbo Commercial / DSCR |
|---|---|---|
| Owner-occupancy required | Yes (51%+) | No |
| Max loan size | $5.5M SBA portion; no total cap | $50M+ (lender-set) |
| Down payment | 10% standard, 15% special-purpose | 20-30% |
| Rate (2026) | 5.5-6.5% CDC + 6.5-7.5% bank | 6.5-8.0% lender-set |
| Rate type | Fixed (CDC); reset on bank (10-yr) | Fixed 5-10 years, then reset |
| Amortization | 25 years (full) | 25-30 years |
| Balloon | None on CDC; bank 10-yr reset | Usually 5-10 year balloon |
| Underwriting basis | Borrower cash flow + collateral | Property cash flow (DSCR) primarily |
| Personal guarantee | Required (20%+ owners) | Often required, sometimes non-recourse |
| Best for | Operating business buying its building | Pure investment property |
The Owner-Occupancy Test
The SBA's owner-occupancy rule is structural — not a paperwork detail. To qualify for 504 on existing buildings, your operating business must occupy 51% or more of the leasable square footage. For new construction, the threshold is 60% at occupancy with a plan to reach 80% within 10 years.
Mixed-use deals can work: a commercial operator who owns a 2-story building, occupies the 51%+ commercial first floor, and rents the upper-floor apartments is SBA-eligible. A pure investor buying a mixed-use building for rental income is not.
When Jumbo Wins
- Pure investment property — you'll rent the entire building.
- Mixed-use where commercial is < 51% — most urban mixed-use buildings.
- Apartment buildings — SBA doesn't fund pure multifamily.
- Foreign national or non-resident borrower — SBA requires US citizen or permanent resident for 20%+ owners.
- Speed — jumbo can close in 30-45 days vs 60-90 for 504.
- Loan size over $5.5M SBA portion with no need to stack — some jumbo lenders go to $50M+.
When 504 Wins
- You'll operate your business in 51%+ of the property.
- You don't have 20-30% equity for a jumbo.
- You want a long-term fixed rate on a meaningful portion of the debt (the CDC fix).
- You're building or expanding (construction-to-perm 504 is well-developed).