Can You Borrow Money for an SBA 504 Loan Down Payment?

SBA 504 Loan Down Payments and Borrowed Funds

Yes, you can borrow money for use as an SBA 504 loan down payment. However, you need to comply with some basic requirements in order to use borrowed money as a down payment. For instance, according to the SBA, “if the small business applicant can demonstrate repayment of this personal loan from sources other than the cash flow of the business, the cash injection may be considered equity. (Note: the salary of the business owner does not qualify.).”

So, you can borrow money to use as your 504 loan down payment, but repaying that loan must be done with a source of capital outside the business taking out the 504 loan. This could be another business that you own, a home equity loan combined with another job you work, a conventional loan repaid by money from your spouse’s job, and more. You’ll need to demonstrate to the SBA that you can repay the loan used as a down payment and that you can still afford the 504 loan.


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