SBA 504 Loan Requirements: The Job Test, the Structure and the Limits
An SBA 504 project must achieve one economic development objective, by one of two routes: create or retain one job opportunity per $95,000 guaranteed by SBA ($150,000 for a Small Manufacturer or an Energy Public Policy project), or achieve a community development or public policy goal in 13 CFR 120.862, where the job average is tested on the whole portfolio of the Certified Development Company (CDC) instead. The $95,000 comes from Federal Register notice 2025-19072, for loans approved on or after 1 October 2025. The $90,000 some CDC and lender pages still print was the May 2023 figure; $65,000 is what 15 U.S.C. 695(e)(1) still says. Under SOP 50 10 8.1 the debenture is cut to fit the job count when a project satisfies neither route.
This is general information, not legal or lending advice. We are not a lender, a CDC or attorneys. SOP 50 10 8.1 applies to applications that "are issued an SBA loan number on or after that date", 1 October 2026 (SBA Information Notice 5000-880695). Where the texts disagree we show each; ask your CDC which applies to your file.
What are the SBA 504 loan requirements in 2026?
An economic development objective, a 10 to 20 percent contribution, majority occupancy, repayment from cash flow, and owners who are U.S. citizens or nationals.
| Requirement | The rule | Source |
|---|---|---|
| Economic development objective | One job opportunity per $95,000 guaranteed by SBA, or a 120.862 goal plus the CDC's portfolio average | 13 CFR 120.860 to 120.862; notice 2025-19072 |
| Borrower contribution | At least 10 percent; 15 for a New Business or a Limited or Special Purpose Property; 20 for both | 13 CFR 120.910 |
| Occupancy | 51 percent of the Rentable Property in an existing building, 60 percent in new construction | SOP Section A, Ch. 3 |
| Debenture | $25,000 to $5,000,000, or $5,500,000 per project for Small Manufacturers and Eligible Energy Public Policy Projects | 13 CFR 120.930(b) and 120.931 |
| Repayment | Historical debt service coverage of 1.15 or more, or at least 2 years of projections | SOP Section C, Ch. 1, Para. E.1 |
| Size | Industry size standard, or tangible net worth not over $20 million and average net income not over $6.5 million | 13 CFR 121.301(b) |
| Ownership | 100 percent of direct and indirect owners must be U.S. Citizens or U.S. Nationals with their Principal Residence in the United States, its territories or possessions; a Lawful Permanent Resident is an Ineligible Person | SOP Section A, Ch. 1, Para. F; Appendix 3 |
Related rules: owner occupancy, ineligible businesses, collateral, personal guarantee and environmental requirements.
How many jobs does an SBA 504 loan have to create?
On the job route, "A Project must create or retain one job opportunity per $95,000 guaranteed by SBA", or per $150,000 for an Energy Public Policy project or a Small Manufacturer (primary NAICS code in Sectors 31, 32 and 33, all production facilities in the United States). It is one of two routes: SOP 50 10 8.1, Section C, Chapter 1, Paragraph A opens "A 504 Project must achieve at least one of the following Economic Development Objectives".
13 CFR 120.861 prints no figure and leaves the amount to a Federal Register notice; notice 2025-19072 sets it for "all 504 loans that are approved under the 504 Loan Program on or after October 1, 2025".
Appendix 3 counts a Job Created as "A full-time equivalent (8 productive hours per day/40 productive hours per week) permanent or contracted employment created within 2 years of financing." A retained job counts only if the CDC can "reasonably show that the job would be lost to the community if the project was not done".
And if a project meets no objective:
If the 504 Project cannot satisfy any of these Economic Development Objectives and guidelines described above, then the amount of the debenture must be reduced to meet the job creation or retention requirement.
So when a project has only the job route (no 120.862 goal, or a CDC portfolio below its average), the job count in the plan sizes the debenture. A worked example, every figure assumed:
| $1,000,000 project | 50/40/10 | Plan defends four jobs |
|---|---|---|
| Third Party Loan | $500,000 | $500,000 |
| Debenture, before administrative costs | $400,000 | 4 x $95,000 = $380,000 at most |
| Borrower contribution | $100,000 | $100,000, plus at least $20,000 |
| Job opportunities at $95,000 | 400,000 / 95,000 = 4.21 | 380,000 / 95,000 = 4.00 |
Read 4.21 and $20,000 as minimums: in the SOP the Gross Debenture "is the Net Debenture Proceeds plus the eligible administrative costs", and the example leaves those costs out (see SBA loan fees). SBA Form 1244 (02/2025) asks the CDC, "Does the project create or retain the required number of jobs per debenture amount?" Neither it nor the statute, regulation, 2025 notice or SOP says in terms whether that amount is gross or net, or that a fractional job is rounded up.
Can a 504 project qualify without meeting the job ratio?
Yes, if it achieves a community development or public policy goal and the CDC's whole portfolio meets its job average. 13 CFR 120.862, echoing 15 U.S.C. 695(d):
A Project that achieves any of the following community development or public policy goals is eligible if the CDC's overall portfolio of 504 loans, including the subject loan, meets or exceeds the CDC's required Job Opportunity average. Loan applications must indicate how the Project will meet the specified economic development objective.
The goals include assisting manufacturing firms, expansion of exports, expansion of small businesses owned and controlled by women or by veterans, minority enterprise development and aiding rural development.
The SOP prints two averages for that portfolio: one job opportunity per $150,000 for 120.862 projects in Paragraph A.1, as in the 2025 notice, and one per $95,000, or $150,000 in Special Geographic Areas, in Paragraph A.2.b. Ask the CDC which it is held to and whether it meets it.
Is the 504 job requirement $65,000, $90,000 or $95,000 per job?
$95,000, for loans approved on or after 1 October 2025. 15 U.S.C. 695(e)(1) still prints $65,000; $90,000 was SBA's May 2023 figure, replaced by the 2025 notice. The statute works as a floor: under subsection (e)(5), with respect to any waiver the Administrator "is prohibited from adopting a dollar amount that is lower than the amounts set forth in paragraphs (1), (2), and (3)". Notice 2025-19072 records each raise:
| Dollars per job | 15 U.S.C. 695(e)(1) | November 2018 notice | May 2023 notice | 2025 notice (in force) |
|---|---|---|---|---|
| Standard | $65,000 | $75,000 | $90,000 | $95,000 |
| Small manufacturer | $100,000 | $120,000 | $140,000 | $150,000 |
On a separate rule three texts do disagree. A refinance without expansion that meets none of the objectives is capped per employee: $75,000 in 15 U.S.C. 696(7)(C)(iv)(I)(bb), $90,000 in 13 CFR 120.882(g)(15) and $95,000 in SOP Section C, Chapter 1, Paragraph C.10. The regulation and the SOP both print a 47.5-employee example: $4,275,000 and $4,512,500 respectively, $237,500 apart. The statute's $75,000 on that headcount is $3,562,500 (47.5 x $75,000), $950,000 below the SOP.
How is a 504 project structured: 50/40/10, 50/35/15 or 50/30/20?
Three sources fund every project (13 CFR 120.900), and the borrower's share is 10, 15 or 20 percent. SOP Section C, Chapter 1, Paragraph B gives the standard split:
a Third Party Lender provides 50% or more of the financing; a Certified Development Company (CDC) provides up to 40% of the financing through a 504 debenture (guaranteed 100% by SBA); and an applicant (Borrower) injects at least 10% of the financing
Under Paragraph E.1, Borrower's Contribution, a New Business (in operation for 2 years or less when the loan is approved) must contribute at least 15 percent, as must a business with a Limited or Special Purpose Property (the SOP's examples include hotels, gas stations and car wash businesses), and the debenture then finances no more than 35 percent. When both apply, "the Applicant must contribute at least 20% of the Project cost". Our free SBA 504 equity calculator runs the dollars; for acceptable sources see SBA equity injection requirements.
What is the maximum SBA 504 loan amount and term in 2026?
From $25,000 to $5,000,000 outstanding per business and its affiliates, or $5,500,000 per project for Small Manufacturers and Eligible Energy Public Policy Projects, for 10, 20 or 25 years (13 CFR 120.930(b) and 120.931; SOP Section C, Chapter 1, Paragraph D).
Since 2026 the limit counts 504 loans only: "To calculate this limit, include only all SBA 504 loans, committed or outstanding, that the Applicant and its affiliates have received." That tracks SBA Policy Notice 5000-879058, effective 4 July 2026, under which a 7(a) balance "does not reduce the maximum loan amount available under the 504 loan program, except as specifically provided in this Notice".
What can 504 loan proceeds pay for?
Long-term fixed assets and the costs that attach to them; in a standard project, not working capital. SOP Section C, Chapter 1, Paragraph C covers land, buildings, machinery and equipment that "must have a useful life of at least 10 years", professional fees, interim financing and, on conditions, refinancing of existing debt (13 CFR 120.882(e) and (g)).
On the construction contingency the texts disagree. 13 CFR 120.882(b) still permits "a contingency reserve for cost overruns not to exceed 10 percent of construction cost". SBA Procedural Notice 5000-872764, effective 30 September 2025, said "SBA is increasing the construction contingency for 504 projects from 10% to 15%", and SOP 50 10 8.1 carries the 15 percent forward. On an assumed $2,000,000 construction budget that is $200,000 or $300,000.
The ineligible list, 13 CFR 120.884, names "Working capital", "Franchise fees" and "Automobiles, trucks, and airplanes". Two narrow exceptions: a refinancing without expansion may include Eligible Business Expenses such as "salaries, rent, utilities, inventory" (13 CFR 120.882(g)), and under the SOP a residual contingency of no more than 2 percent of the debenture "may be refunded to the small business as working capital". For 7(a) uses, see SBA loan requirements.
What does a business plan for an SBA 504 loan have to show?
Which economic development objective the project meets, repayment from the operating business alone, and a sources and uses that fits the structure. On repayment the SOP sets a historical floor: "The DSC ratio must be equal to or greater than 1.15:1." Where history falls short, "For projection-based projects, the analysis must include a minimum of 2 years of projections." Rent from the Project Property "must not be included in the repayment ability analysis". A new business also needs "a monthly cashflow analysis for the first 12 months of operations or for 3 months beyond the breakeven point (whichever is longer)". See SBA feasibility study requirements and SBA debt service coverage requirements.
In the plan:
- On the job route, a job schedule: each position, start month, hours per week and FTE at 40 hours, reconciled to the debenture divided by $95,000 or $150,000, plus evidence for any retained job. The two-year clock runs from completion of the project in the statute, receipt of 504 funds in 13 CFR 120.802 and financing in SOP Appendix 3; confirm it with the CDC.
- On the goal route, the 120.862 goal by name and how the project achieves it.
- Coverage from the operating business alone, without Project Property rent.
- A sources and uses at 50/40/10, 50/35/15 or 50/30/20, with nothing ineligible funded from the debenture.
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How we verified this
Sources were retrieved from 5 to 10 October 2026; every quotation was re-checked against the raw text on 10 October 2026, after SBA re-posted the SOP file.
- SBA SOP 50 10 8.1, effective 1 October 2026: Section C, Chapter 1; Section A, Chapters 1 and 3; Appendix 3. Read from the current posting on sba.gov; scope from SBA Information Notice 5000-880695.
- Federal Register notice 2025-19072 (90 FR 47117), 30 September 2025, for the job figures and history. No later Federal Register notice to 10 October 2026 changes the job figures or the debenture limits.
- 13 CFR 120.802, 120.860 to 120.862, 120.882, 120.884, 120.900, 120.910, 120.930, 120.931 and 121.301, 2025 annual edition, the most recent on govinfo.gov.
- 15 U.S.C. 695 and 696, for the statutory figures, read at the Legal Information Institute.
- SBA Policy Notice 5000-879058, effective 4 July 2026 (limit coordination), and SBA Procedural Notice 5000-872764, effective 30 September 2025 (15 percent contingency).
- SBA Form 1244 (02/2025), retrieved from sba.gov on 10 October 2026, for the CDC's jobs question.
Not verified, so not on this page: any rounding rule for fractional jobs; whether the job ratio's debenture amount is gross or net; which portfolio average a CDC is held to; debenture interest rates.
Frequently asked questions
What is the SBA 504 job creation requirement per dollar borrowed?
One job opportunity per $95,000 guaranteed by SBA, or per $150,000 for a Small Manufacturer or an Energy Public Policy project, for 504 loans approved on or after 1 October 2025 (Federal Register notice 2025-19072). The alternative route is a 13 CFR 120.862 goal.
What happens if a 504 project cannot meet the job requirement?
A 504 project can still qualify through a community development or public policy goal in 13 CFR 120.862, if the CDC's portfolio meets its job average. Under SOP 50 10 8.1, a project that satisfies no objective has its debenture reduced.
What is the maximum SBA 504 loan amount in 2026?
Under 13 CFR 120.931, $5,000,000 outstanding per 504 borrower and its affiliates, or $5,500,000 per project for Small Manufacturers and Eligible Energy Public Policy Projects. Since 4 July 2026 a 7(a) balance does not reduce that limit, except as Policy Notice 5000-879058 provides.
What is the 504 loan structure, 50/40/10?
SOP 50 10 8.1 says that "generally" a Third Party Lender provides 50 percent or more of a 504 project, a CDC debenture up to 40 percent and the borrower at least 10 percent. The borrower's minimum is 15 percent for a New Business or a Limited or Special Purpose Property, 20 percent for both.
Can a 504 loan pay for working capital or a vehicle?
Not in a standard 504 project: 13 CFR 120.884 names working capital, franchise fees, and automobiles, trucks and airplanes as ineligible. The narrow exceptions are Eligible Business Expenses in a refinancing without expansion (13 CFR 120.882(g)) and a small residual contingency refunded as working capital.
This page summarizes SBA SOP 50 10 8.1, 13 CFR Part 120, 15 U.S.C. 695 and 696, and Federal Register notice 2025-19072 as retrieved 5 to 10 October 2026. It is general information, not legal, lending or tax advice. Confirm the objective, the structure and the debenture size with your CDC before you sign.