SBA 504
SBA 504 is a long-term, fixed-rate financing program for major fixed assets — land, buildings, renovations, and long-lived machinery — delivered through a Certified Development Company alongside a third-party lender. It cannot fund working capital or a stand-alone goodwill purchase.
Why SBA 504 Matters in a Laundromat Sale
504 becomes relevant when a laundromat purchase includes the building. SBA lists a maximum debenture generally up to $5.5 million with 10-, 20-, and 25-year maturity options, and eligible equipment must have at least ten years of remaining useful life (Source: SBA 504 Loans). Effective July 4, 2026, SBA policy decoupled cumulative 7(a) and 504 limits so eligible borrowers can access up to $10 million combined, though each program's own use limits still apply.
Example
A buyer acquires a store and its building for $900,000. The real property portion is financed with 504 fixed-rate debt at a long maturity, while the business goodwill and working capital are financed separately, commonly under 7(a).
What to Check
- Separate the real-property financing from the business acquisition financing.
- Confirm equipment has at least ten years of remaining useful life if it is included.
- Check current program limits and how they interact with any 7(a) exposure.
Where This Comes Up
- SBA 504 for a Laundromat With Real Estate: What It Can and Cannot Fund
- Buying a Laundromat With the Building: Two Underwritings, One Deal
- Valuing a Laundromat With Real Estate: Split the Business From the Building
- Laundromat Valuation: How Stores Are Priced and Why
Related Terms
- SBA 7(a) — SBA 7(a) is the U.S. Small Business Administration's primary loan guaranty program
- Cap Rate — Cap rate
- Personal Guarantee — A personal guarantee is a promise by an individual to be personally responsible for a business obligation — most often a lease or an acquisition loan — if th...
See the full laundromat glossary for all 78 terms.
The Next Step
Sources
- U.S. Small Business Administration, 504 Loans — https://www.sba.gov/loans/504-loans/
This page is general information about laundromat transactions, not legal, tax, or investment advice, and not a guarantee of sale price, timing, or financing approval. Verify current rules with your own CPA, attorney, lender, and the relevant state or municipal agency before acting.