• What Exactly Does Special Purpose Property Mean?

    Community Business Finance's 504 Loan Program is specifically designed for purchasing property or equipment with a low fixed interest rate and as little as 10% down. However, the SBA classifies some properties as a "special purpose property," which requires a 15% down payment on 504 loans. Borrowers planning to buy a special purpose property should be prepared for this additional expense.

    The SBA defines a special purpose property as "a property that is appropriate for one use or limited use: a building that cannot be converted to another use without a large capital investment."

    According to their SOP, the SBA considers only the following as a limited or special purpose property:

    • Amusement Parks
    • Bowling Alleys
    • Car wash properties
    • Cemeteries
    • Clubhouses
    • Cold storage facilities where more than 50% of total square footage is equipped for refrigeration
    • Dormitories
    • Farms, including dairy facilities
    • Funeral homes with crematoriums
    • Gas stations
    • Golf courses
    • Hospitals, surgery centers, urgent care centers and other health or medical facilities
    • Hotels and motels
    • Marinas
    • Mines
    • Museums
    • Nursing homes, including assisted living facilities
    • Oil wells
    • Quarries, including gravel pits
    • Railroads
    • Sanitary landfills
    • Service centers (e.g., oil and lube, brake or transmission centers) with pits and in ground lifts
    • Sports arenas
    • Swimming pools
    • Tennis clubs
    • Theaters
    • Wineries


    Be careful not to make the mistake of assuming your property is on this list. Sometimes conventional lenders will consider a facility to be special use when the SBA does not. For an example of this, read about our client that used a 504 loan to open a gun range.

    If you have any questions about special purpose properties or Community Business Finance's 504 Loan Program contact our offices

    In Texas call Bill Ebersole at 713-457-1650, ext. 201, or email him at bill@communitybusinessfinance.com.

    In Louisiana, call Jeanne Bergeron at 1-800-462-1017 or email her at jeanne@communitybusinessfinance.com.



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