Financing Small-Bay Industrial Purchases
This page is a general orientation to how buyers typically finance small-bay industrial, flex, and contractor garage purchases, not a recommendation of any particular loan or lender. Financing terms change, and your own lender is the right source for current rates, underwriting requirements, and which program actually fits your deal.
Conventional bank financing
Conventional commercial real estate loans, typically through a local or regional bank, are the most common path for both owner-occupied and investment purchases. Terms vary by lender and by deal, generally including a down payment, a fixed or variable interest rate, and underwriting based on the property's income (for investment purchases) or the operating business's financials (for owner-occupied purchases). Local banks and credit unions with existing small-business relationships are often the first stop for buyers in this asset class.
SBA 504 loans
The SBA 504 loan program provides long-term, fixed-rate financing, up to $5.5 million, for major fixed assets, including the purchase or construction of owner-occupied commercial real estate. 504 loans are issued through Certified Development Companies (CDCs), SBA's community-based nonprofit lending partners, and typically carry lower down payments than conventional financing along with 10-, 20-, or 25-year repayment terms. They generally can't be used for working capital, inventory, or investment (non-owner-occupied) real estate. Eligibility runs through standard SBA size and financial thresholds, and a business must operate for-profit in the U.S.
Source: U.S. Small Business Administration, "504 loans," sba.gov, updated March 2026.
SBA 7(a) loans
The SBA 7(a) program is SBA's primary business loan program, offered through participating lenders with an SBA guaranty backing the loan. Unlike the 504 program, 7(a) proceeds can cover a broader range of uses, real estate acquisition, refinancing, working capital, equipment, and even a change of business ownership, in a single loan. The maximum loan amount is $5 million, with SBA guaranteeing 85% of loans of $150,000 or less and 75% of larger loans. Because it's more flexible than the 504 program, 7(a) financing is common for buyers who need real estate and working capital in the same transaction, such as an owner-occupant purchasing a contractor garage or small-bay building for a growing trade business.
Source: U.S. Small Business Administration, "7(a) loans," sba.gov, updated March 2026.
Combining 504 and 7(a) financing
As of July 2026, borrowers can combine a 7(a) loan and a 504 loan on the same project, up to $5 million through each program, for up to $10 million in combined SBA-backed financing. That's double the previous combined limit of $5 million. This can matter for a larger small-bay purchase or development deal that needs both real estate financing and working capital, pairing a 504 loan for the building with a 7(a) loan for equipment or operating capital, for example, rather than choosing one program over the other.
Source: U.S. Small Business Administration, "SBA Doubles Cumulative 7(a) and 504 Loan Limit to $10 Million," news release 26-52, sba.gov, May 2026.
Which program fits
At a high level: 504 loans tend to fit straightforward owner-occupied real estate or equipment purchases where a lower down payment and a long fixed-rate term matter most. 7(a) loans tend to fit deals that need more flexibility, real estate plus working capital, a partial ownership change, or a use case that doesn't cleanly fit the 504 program's rules. Many buyers qualify for both and the right fit depends on deal structure, timeline, and your lender's own program. This is a decision to make with your lender or SBA-approved CDC, not something to determine from a general overview like this one.
About this page
Grady Collins is a commercial real estate agent with eXp Commercial, focused on small-bay industrial and contractor garages across Hamilton, Butler, and Warren counties. Before real estate, Grady started in audit at Deloitte and spent years in financial leadership inside public and private companies, including financial oversight of a $3.5 billion enterprise spanning more than 500 legal entities. He holds a BSBA in accounting from Ohio State. That background shows up in how he underwrites a deal: he reads the numbers the way an operator does, not just the way a broker does. Grady's also the principal at Main Street Exit Partners, a business brokerage for owner-led companies in the Cincinnati area. If selling the business itself, not just the building, is part of your plans, that's worth a conversation too.
Evaluating a small-bay or contractor garage purchase and want to talk through the real estate side of financing? Get in touch.