Long Beach is one of Southern California's most dynamic commercial markets, with over 462,000 residents, a GDP exceeding $25 billion, and the Port of Long Beach supporting 2.7 million jobs nationwide. For small business owners looking to purchase or expand owner-occupied commercial real estate in Long Beach, the SBA 504 loan program delivers one of the most cost-effective financing structures available: below-market fixed interest rates, terms up to 25 years, and as little as 10% down.
Whether you operate a healthcare practice near Long Beach Memorial Medical Center, run an aerospace parts supplier near Boeing's facility, or manage a professional services firm in the downtown Long Beach corridor, SBA 504 loans are built for businesses like yours. This guide covers how the program works in Long Beach, which local Certified Development Companies can help, and what you need to qualify.
What Is the Three-Party Structure of an SBA 504 Loan?
The SBA 504 loan uses a distinctive three-party financing structure that divides the total project cost among three participants. This structure is what separates the 504 program from conventional commercial mortgages and makes it so attractive for Long Beach business owners who want to minimize their out-of-pocket investment while locking in long-term fixed rates.
A conventional lender, typically a bank or credit union, provides 50% of the project cost through a first-lien mortgage. A Certified Development Company (CDC) provides up to 40% through an SBA-guaranteed debenture, which carries a fixed interest rate for the full loan term. The borrower contributes the remaining 10% as equity. In some cases, borrowers may need to contribute 15% or 20%, depending on factors discussed later in this guide.
This structure benefits Long Beach business owners in several important ways. The bank holds a lower-risk first position, which often translates to better terms on their portion of the financing. The CDC debenture carries a fixed rate pegged to Treasury yields, typically landing between 5.67% and 5.91% depending on the term and funding cycle as of early 2026. And the borrower gets into a property with significantly less cash out of pocket than a conventional commercial loan would require.
For example, a Long Beach healthcare practice purchasing a $2.5 million medical office building near the Long Beach Exchange would structure financing as follows: $1.25 million from the bank, $1 million from the CDC debenture, and $250,000 from the borrower. Compare that to a conventional loan requiring 25% down, or $625,000, and the savings become immediately apparent.
The three-party structure also means that two separate institutions share the risk. If the Long Beach borrower defaults, the bank's first-lien position is protected, while the SBA guarantee covers the CDC's exposure. This shared-risk model is why banks are often willing to offer more favorable terms on their 50% portion than they would on a standalone commercial mortgage.
Which CDCs Serve Long Beach Business Owners?
Long Beach falls under the SBA's Santa Ana District Office jurisdiction and is served by several Certified Development Companies that specialize in originating, processing, and servicing 504 loans throughout Southern California. Each CDC operates as a nonprofit organization focused on promoting economic development within their service area.
Southern California CDC (SoCal CDC) is one of the most active CDCs in the region, providing SBA 504 loans to small businesses across Los Angeles County, including Long Beach. They offer competitive interest rates and hands-on guidance through the entire application process, from initial pre-qualification through debenture funding.
Statewide CDC is a nonprofit lender specializing in SBA 504 loans that primarily serves California, Nevada, and Arizona. They are known for fast turnaround times and have extensive experience with Long Beach commercial transactions across healthcare, manufacturing, and professional services sectors.
PCR Business Finance serves the greater Los Angeles area with a focus on community development and small business growth. They partner with local banks to structure 504 loans for a wide range of Long Beach industries, and they have a strong track record of helping first-time 504 borrowers navigate the process.
TMC Financing operates statewide and has closed billions of dollars in SBA 504 loans across California. They specialize in commercial real estate acquisitions and can help Long Beach borrowers identify properties that meet 504 eligibility requirements.
The Long Beach Small Business Development Center (SBDC), located at Long Beach City College (4900 E. Conant Street, Building O2, Suite 108), provides free counseling to help business owners navigate the SBA 504 application process. Their advisors can review your business plan, help you prepare financial documents, and connect you with the right CDC for your Long Beach project. You can reach the Long Beach SBDC at 562-938-5100.
What Are the Current SBA 504 Interest Rates for Long Beach Borrowers?
SBA 504 debenture rates change monthly with each funding cycle. As of the February 2026 funding, rates remain historically competitive compared to conventional commercial mortgage alternatives available in the Long Beach market.
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These rates include ongoing servicing fees to the SBA (0.364%), the CDC (0.625%), and the Central Servicing Agent (0.100%). For manufacturing businesses in Long Beach, rates are approximately 25 basis points lower due to the annual service fee waiver in FY2026. This makes the program especially attractive for the aerospace and manufacturing companies that are a cornerstone of Long Beach's economy.
One important note: the SBA reinstituted an upfront guaranty fee of 50 basis points for non-manufacturing projects in FY2026. While this adds a small cost at closing, the long-term savings from the fixed below-market rate typically far outweigh this fee over the life of the loan. On a $1 million debenture, the guaranty fee is $5,000, but the interest savings over 25 years compared to a conventional variable-rate loan can easily exceed $100,000.
Compared to conventional commercial mortgages in Long Beach, which commonly carry variable rates between 7.5% and 9.5% with 5-to-10-year balloon terms, the SBA 504 fixed rate over 25 years can save a Long Beach business owner hundreds of thousands of dollars in interest while eliminating the refinancing risk that comes with short-term balloon maturities.
It is worth noting that the bank's first-lien portion (50% of the project) is not subject to the SBA debenture rate. Banks set their own terms for this portion, which may be fixed or variable. Working with an experienced commercial lending advisor can help Long Beach borrowers negotiate the best possible terms on the bank's portion as well. Contact our team to discuss current bank rate options for Long Beach 504 projects.
What Types of Long Beach Properties Qualify for SBA 504 Financing?
The SBA 504 program is designed exclusively for owner-occupied commercial real estate, meaning the business must occupy at least 51% of the property. For new construction projects, the occupancy requirement increases to 60% initially but must reach 80% within ten years. Long Beach offers a diverse commercial landscape that supports many eligible property types.
Long Beach has particularly strong demand for 504 loans among healthcare providers (the city's largest employment sector with 33,164 workers in Health Care and Social Assistance), professional services firms clustered in downtown Long Beach and the World Trade Center, aerospace and manufacturing companies near Boeing's C-17 campus, and retail and restaurant operators along the Belmont Shore and 2nd Street corridors.
Specific Long Beach property types that commonly qualify for SBA 504 financing include medical and dental office buildings, auto repair shops along Pacific Coast Highway, restaurants and specialty food businesses in the Bixby Knolls district, warehouse and light industrial facilities in the West Long Beach industrial corridor, professional office condominiums in the downtown area, and childcare centers serving Long Beach's growing family population.
Properties that do not qualify include rental or investment properties where the business does not occupy at least 51%, speculative real estate, and properties used for passive income generation. If you are looking for investment property financing in Long Beach, explore our bridge loan programs or DSCR loans instead.
How Much Down Payment Is Required in Long Beach?
The SBA 504 program requires significantly less equity than conventional commercial loans. However, the exact percentage depends on your business situation and the property type. Understanding these tiers helps Long Beach borrowers plan their capital requirements accurately.
For context, conventional commercial loans in Long Beach typically require 20% to 25% down. On a $3 million project, that means $600,000 to $750,000 in cash at closing. The SBA 504 program can cut that requirement by more than half, freeing up capital for equipment purchases, hiring new employees, marketing investments, or operating reserves.
Given Long Beach's commercial real estate market, where average commercial property prices have risen significantly alongside the residential market (median home prices reached $914,000 in early 2026), the reduced down payment requirement is especially valuable for growing businesses. A Long Beach restaurant owner looking to purchase their leased space, for instance, might save $150,000 or more in upfront cash requirements by using the 504 program instead of conventional financing.
The down payment must come from the borrower's own funds or acceptable sources such as gifts from family members, seller contributions (limited), or secondary financing. The CDC and participating lender will verify the source of funds during the application process. Long Beach borrowers should be prepared to document the origin of their down payment thoroughly.
What Is the SBA 504 Loan Process Timeline in Long Beach?
The SBA 504 loan process takes longer than a conventional commercial mortgage, typically 60 to 90 days from application to funding. Understanding each step helps Long Beach borrowers plan accordingly and avoid delays that can jeopardize a purchase contract.
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The timeline can vary based on the complexity of the project, the responsiveness of the borrower in providing documentation, and the SBA's current processing volume at the Santa Ana District Office. Long Beach borrowers should work closely with their CDC and participating lender to keep the process on track. Having your tax returns, financial statements, and business plan organized before starting the application can shave one to two weeks off the total timeline.
One unique aspect of the 504 program is the debenture funding schedule. The SBA conducts debenture sales on a set monthly calendar. If your loan is authorized between funding dates, you may need to wait for the next sale, which can add two to four weeks. Your CDC can help you time your application to align with the funding schedule.
To get started, contact our team for a free pre-qualification assessment. We can connect you with the right CDC and structure a financing package tailored to your Long Beach property. You can also use our commercial mortgage calculator to estimate payments before you apply.
How Does an SBA 504 Loan Compare to Conventional Financing?
For Long Beach business owners weighing their options, understanding the differences between SBA 504 loans and conventional commercial mortgages is essential for making the right decision. Each option has distinct advantages depending on your timeline, property type, and financial situation.
The SBA 504 loan is the clear winner for Long Beach businesses that plan to occupy their property long-term and can accommodate 60 to 90 days for closing. The fixed rate and 25-year term provide budget certainty that is difficult to match with conventional financing, which typically resets or balloons every 5 to 10 years.
However, if you need to close quickly on a Long Beach property or the business does not meet the owner-occupancy requirement, a conventional commercial mortgage or bridge loan may be a better fit. Some Long Beach investors use a bridge loan to acquire the property quickly, then refinance into a 504 loan once the occupancy and documentation requirements are met. Use our commercial mortgage calculator to compare monthly payment scenarios for both options.
Another consideration is the SBA's personal guarantee requirement. All owners with 20% or more equity in the business must provide an unlimited personal guarantee on the 504 loan. While conventional loans also require guarantees in most cases, some Long Beach borrowers prefer the non-recourse options available through conduit loans for larger projects.
Which Long Beach Industries Benefit Most from SBA 504 Loans?
Long Beach's diversified economy creates strong demand for SBA 504 loans across multiple industries. The city's three powerhouse sectors, healthcare, aerospace, and education, drive much of the commercial real estate activity, but 504 loans serve a much broader range of Long Beach businesses.
Healthcare and medical practices represent the largest share of SBA 504 activity in Long Beach, reflecting the city's status as a regional healthcare hub anchored by MemorialCare Long Beach Medical Center. With 33,164 workers in the Health Care and Social Assistance sector alone, demand for medical office space in Long Beach continues to grow. Doctors, dentists, veterinarians, and specialty clinics frequently use 504 loans to transition from leasing to ownership.
Aerospace and defense companies, many supplying Boeing and other contractors operating in the region, frequently use 504 loans to purchase manufacturing and warehouse space. The Long Beach area has a deep aerospace supply chain, and the 504 program's manufacturing rate discount makes it even more attractive for these businesses.
The Port of Long Beach, generating over $300 billion in GDP nationally and supporting 50,000 jobs regionally, also creates significant demand for logistics, warehousing, and transportation-related facilities. Owner-operators of trucking companies, freight forwarders, and customs brokers along the I-710 corridor commonly use 504 loans to purchase their own facilities rather than paying increasing lease rates.
Retail trade employs 22,906 workers in Long Beach, and restaurant and food service operators along popular corridors like 2nd Street, Pine Avenue, and Atlantic Avenue are frequent 504 borrowers as well.
What Are the Eligibility Requirements for Long Beach Businesses?
To qualify for an SBA 504 loan in Long Beach, your business must meet specific criteria set by the SBA. These requirements ensure the program serves its intended purpose of helping small businesses grow and create jobs in the community.
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The job creation requirement is a key component of the 504 program. Standard projects must create or retain one job for every $90,000 of SBA debenture funding. For manufacturing and energy projects, the threshold is one job per $140,000. Long Beach businesses that meet specific public policy goals, such as operating in a HUBZone, expanding export capacity through the Port of Long Beach, or achieving energy reduction targets, may have additional flexibility on job creation requirements.
Additional eligibility criteria include operating as a for-profit business within the United States, having a tangible net worth of less than $20 million, and having an average net income of less than $6.5 million after federal income taxes for the two years preceding your application. The business must also demonstrate that it cannot obtain financing on reasonable terms from other sources without SBA assistance.
Long Beach businesses in certain restricted industries are not eligible, including those involved in lending or investing, speculative activities, multi-level marketing, gambling, or the production of products deemed offensive. Your CDC can help determine whether your specific Long Beach business qualifies.
What Can SBA 504 Loan Proceeds Be Used for in Long Beach?
Understanding eligible and ineligible uses of SBA 504 loan proceeds helps Long Beach borrowers structure their projects correctly from the start and avoid delays during the application review process.
The most common use of SBA 504 loans in Long Beach is the purchase of existing commercial buildings for owner-occupancy. With the city's aging commercial building stock, many Long Beach business owners find opportunities to purchase properties that they have been leasing for years, finally building equity instead of paying rent.
New construction of owner-occupied facilities is also popular in Long Beach, particularly for healthcare practices and specialized manufacturing operations that need custom-built space. The city's planned development zones in the downtown area and along the Pacific Coast Highway corridor offer new construction opportunities that pair well with 504 financing.
Land acquisition and improvements are eligible expenses, though they must be part of a larger project that includes building construction or renovation. Long Beach businesses can also use 504 proceeds to purchase long-life machinery and equipment, such as medical imaging equipment, CNC machines, or specialized tools with a useful life of 10 years or more.
Long Beach businesses can also use the refinance program to convert existing variable-rate commercial mortgages to the 504's fixed rate, which has been especially attractive as rates have stabilized in early 2026. The refinance program allows eligible borrowers to lock in the below-market debenture rate on debt that was originally financed through conventional channels.
Frequently Asked Questions About SBA 504 Loans in Long Beach
What is the maximum SBA 504 loan amount available in Long Beach?
The maximum SBA debenture is $5.5 million for most projects. However, Long Beach businesses investing in energy efficiency improvements can access up to $16.5 million, three times the standard cap. Your project qualifies for this enhanced limit if it reduces energy consumption by at least 10% or generates 15% or more of facility energy needs through renewable sources. Since the total project cost includes the bank's 50% portion and the borrower's equity, the total project size can exceed $13 million under the standard cap.
How long does it take to close an SBA 504 loan in Long Beach?
Most Long Beach SBA 504 loans close within 60 to 90 days from application submission. The timeline includes pre-qualification review, application packaging, SBA authorization through the Santa Ana District Office, bank closing on the first lien, and CDC debenture funding per the SBA's monthly schedule. Complex projects or those requiring environmental reviews may take longer.
Can I use an SBA 504 loan to buy a mixed-use property in Long Beach?
Yes, as long as your business occupies at least 51% of the property. Long Beach has many mixed-use buildings, particularly in the downtown and East Village Arts District areas, that can qualify for 504 financing if the occupancy requirement is met. The non-occupied portion can be leased to other tenants, providing additional income to help service the debt.
What credit score do I need for an SBA 504 loan in Long Beach?
While the SBA does not set a minimum credit score, most participating lenders in the Long Beach market look for a FICO score of 680 or higher. Borrowers with scores below this threshold may still qualify if they have strong business financials, substantial equity, or additional collateral. A history of on-time payments on existing business obligations is also important.
Can startups in Long Beach qualify for SBA 504 loans?
Yes, but startups (businesses operating for less than two years) face higher down payment requirements. Instead of 10%, a Long Beach startup will need 15% down, or 20% if the property is also a single-purpose facility. Working with a local SBDC counselor at Long Beach City College can help strengthen your application by developing a solid business plan and financial projections.
Are there SBA 504 loans available for refinancing existing Long Beach commercial mortgages?
Yes. The SBA 504 refinance program allows Long Beach business owners to refinance existing commercial mortgages into the 504's below-market fixed rate. This is particularly valuable for borrowers with adjustable-rate loans facing rate resets. The refinance program has slightly different servicing fees (0.389% vs. 0.364% for purchase loans) but still offers significant savings over the life of the loan. Learn more about our refinance options.
Where can I find SBA lending resources in Long Beach?
The Long Beach SBDC at Long Beach City College provides free counseling and application assistance. The SBA's Santa Ana District Office oversees the Long Beach area. You can also contact Clear House Lending for help structuring your 504 financing with the right CDC and participating lender.
Ready to explore SBA 504 financing for your Long Beach commercial property? Contact our team today for a free consultation, or use our commercial mortgage calculator to estimate your monthly payments. You can also explore our SBA loan programs and permanent loan options to find the best fit for your business. For Long Beach investors looking at non-owner-occupied properties, check out our DSCR calculator and bridge loan programs.