When using the SBA 504 program, a borrower is required to inject a minimum of 10% equity into the project. This can be in the form of cash or land. There are two cases where additional equity will be required:
1) If the borrower is new to the business or has less than two years experience in this exact type of business, an additional 5% equity will be required.
2) If the project involves special purpose real estate that cannot easily be converted into another business, an additional 5% equity will be required. Examples of special purpose real estate are: gas stations, hotels, recreational facilities, car washes, farms, and nursing homes/assisted living.
If the borrower is both new to the business and the project involves special purpose real estate, the borrower will be required to inject 20% equity.