Overview
SBA 504 financing is commonly used for owner-occupied commercial real estate, which can include car wash properties when the operating business will occupy the site. The 504 structure typically involves a first-position lender and an SBA-supported component arranged through a Certified Development Company.
The basic structure
A 504 transaction generally combines two sources of financing secured by the real estate, plus a borrower equity contribution. The first-position lender and the SBA-supported piece work together to fund eligible project costs.
What 504 financing is typically used for
- Purchase of real estate used by the car wash business
- Construction or expansion of owner-occupied facilities
- Major fixed asset improvements that are tied to the property
How lenders underwrite a car wash 504 deal
Underwriting focuses on cash flow coverage, borrower strength, and the property itself. For car washes, lenders want revenue that is consistent and supported by deposits, plus a clear picture of equipment condition and maintenance practices.
Timeline expectations
504 transactions can involve more steps than a conventional loan because multiple parties are involved. A clean file with clear documentation helps prevent delays.
Bottom line
SBA 504 loans can be a good fit for car wash real estate when the business will occupy the property and the deal is supported by verifiable cash flow and strong borrower capacity.