Product · Path 03
SBA 504 for the med-spa owner buying their clinic space.
The long-term / fixed-rate / owner-occupant path to the suite the practice already operates out of, the build-out at the next clinic, or a ballooning commercial mortgage whose reset window is closing. 10% owner-equity injection, a 25-year CDC tranche at a fixed rate pegged to the 10-year Treasury, and a realistic 6 – 12 week close. Read the program anatomy, the three med-spa use cases, the eligible project costs, the qualifying profile, and the timeline before you spend sixty seconds on the intake.
What the 504 actually is
Three capital stacks, two underwriting desks, one SBA guarantee.
SBA 504 is the only capital structure on the desk that pairs a CDC second-mortgage tranche with a fixed-rate long-term term and an SBA-guaranteed debenture, against an owner-occupant real-estate or build-out file. The three pieces below are what make the program the right tool for a med-spa buying or building out a clinic.
Owner equity
10% injection
Cash to close
The owner puts 10% down in cash. On a $1.5M build this is $150k. SBA reduces the ask on green / rural / manufacturing projects but the med-spa owner-occupant file is the 10% / 20% read.
Bank senior loan
50% of project
Prime or SOFR + spread
A first-position bank or credit-union piece — typically prime or SOFR-based, amortizing, with the shortest term of the three. The bank signs off on the file and services the senior loan in-house.
CDC second-mortgage
40% of project
Fixed rate · 20 / 25-yr term
The Certified Development Company sells a debenture on the secondary market at a fixed rate pegged to the 10-year Treasury at sale. The CDC tranche is the long-term / fixed-rate / owner-occupant piece that makes 504 the right tool for a clinic.
Use cases
Three situations that bring an owner to 504.
The desk sizes to the actual reason the SBA file exists — the same underwriting reading the desk uses for equipment financing and MCA, applied to the real-estate / build-out side of the practice. The three below cover north of ninety percent of 504 intake files — specialty situations ship on the same program structure.
Owner-occupied clinic purchase
Buying the suite the practice already operates out of, or the next clinic in the rental block. 504 is the right tool here because the SBA collateralizes the real estate itself; the 25-year term is the long-term ceiling rather than a balloon-reset in year seven.
Close in 60–90 days · 25-yr amort on the real-estate tranche
Build-out for a new location
Replicating the flagship device stack and waiting room at a second clinic — TI, leasehold improvements, fixtures, the soft-cost bake. 504 funds the construction through a 9 / 12 month second advance, so the file does not run out of pre-fund before the certificate of occupancy.
TI funded in 9–12 month second advance · owner-occupant only
Refinance a ballooning commercial mortgage
A commercial mortgage ballooning in the next 12–24 months — usually a 5 / 10 / 15-year note on a med-spa suite whose amortization ran out. 504 refis the balloon into a fixed-rate 25-year CDC tranche and consolidates the bank piece, before the reset hits the file.
Refi a balloon before it resets · CDC piece locks the rate
Eligible project costs
What the 504 program actually funds.
SBA 504 prices to the project budget against three buckets — real estate, construction / soft costs, and long-term equipment. The desk sizes the program to the mix the file actually presents, then bridges to equipment financing for the device stack and MCA for the working-capital gap the 504 program cannot fund.
Real estate
Included
Purchase of land + building; construction of a new facility; conversion or improvement of existing property for the practice. The CDC tranche is 25-year fixed on the real-estate portion.
Not on this tranche
Land held for investment, with no owner-occupant use case. Pure investment real estate is not 504-eligible; the SBA piece needs an owner-occupant operator on the file.
Pairs naturally with /equipment-financing for the device stack inside the new suite.
Construction / renovation / soft costs
Included
Tenant improvements, leasehold improvements, architectural and engineering fees, environmental studies, building permits, soft costs through the construction period. Funded in a 9 / 12 month second advance at the construction milestone.
Not on this tranche
Working capital, payroll, inventory, the operating P&L — SBA 504 cannot fund the negative month on the file. Pair with /merchant-cash-advance for the cash gap while the build-out closes.
MCA bridges the operating P&L while the 504 second-advance lands against TI and soft costs.
Long-term equipment
Included
Aesthetic lasers, RF / microneedling, body contouring, hydrafacial-class platforms, PRP centrifuges, surgical / procedure-room equipment whose useful life justifies a 10-year amortization. The CDC tranche prices these as fixed-asset capex in the project budget.
Not on this tranche
Short-use consumables (fillers, skincare inventory, single-use supplies), short-term equipment, anything with a useful life under ~10 years. Maven / lighter consumables route through /equipment-financing or MCA.
Pairs with /equipment-financing for the long-tail device stack and the financing band that price-matches each device against its useful life.
Qualifying profile
What the SBA + bank underwriting desk reads.
The 504 desk reads an owner-occupant file against four signals — time in business, the 51% owner-occupancy rule, debt service coverage, and a clean credit / no-back-taxes record — plus the SBA small-business size-cap check that rebuts the recurring “504 is for huge companies” objection.
Time in business
2 years TIB · 1 year with industry experience
A clinic that has been operating for two years is the clean read. A practice that has been operating for one year with an owner who brings 5+ years of aesthetic-practice experience on the resume — injector, medical director, regional operator — is workable. Anything shorter needs an SBA pre-screen conversation before underwriting.
Owner-occupancy ≥ 51%
Operator occupies the asset — not an investment
The SBA insures only the owner-occupant piece. An aesthetic practice that operates out of the space and accounts for at least 51% of the square footage qualifies. A pure investment / landlord read — where the practice tenants out the building to other operators — does not. The 504 program is for the owner-occupant operator; it is not a commercial-mortgage refi.
Debt service coverage
DSCR ~ 1.15 – 1.20 typical floor
The underwriter sizes the file to a 1.15 – 1.20 DSCR on the new debt service, against trailing twelve months of EBITDA plus a reasonable growth haircut. A med-spa on a Q1 / Q4 membership cycle needs the global cash flow to show as net-positive across every rolling 30-day window — no negative months.
No recent charge-offs / back-taxes
Clean credit + paid tax obligations
No open bankruptcies, no recent charge-offs (charge-offs aged 24+ months and resolved are workable), no back-taxes owed to the IRS or the franchise-tax board. A pre-existing commercial mortgage on the file is in scope; that is the refi-the-balloon use case above.
“504 is for huge companies” — the size-cap rebuttal
SBA size standard keys off revenue or employees — not gross assets.
The SBA small-business size standard is set per NAICS code and counts revenue oremployee headcount, never gross assets. Aesthetic practices on NAICS 621111 / 621112 / 621210 typically read at the “other” ~$13.5M revenue / ~150 employee cap, which is comfortably above the size of a single-suite med-spa or a 2–3 location group. The 51% owner-occupancy rule (above) is what gates the file, not a revenue cap.
NAICS
Practice shape
Size standard
621111
Offices of physicians (general med-spa)
$13.5M revenue / ~150 employees
621112
Offices of physicians, mental-health-adjacent
$13.5M revenue / ~150 employees
621210
Offices of dentists / dental-aesthetic hybrids
$13.5M revenue / ~150 employees
Timeline
6 – 12 weeks, not the fast-cash path.
The 504 program is the long-term / fixed-rate / owner-occupant path — not the fast-cash bridge. A med-spa owner selling the file to the SBA + bank + CDC underwriting desks should plan for a 6 – 12 week close from the same intake that closes MCA in 7–14 days and equipment financing in 7–14 days. The five steps below are what the desk reads on every file.
Intake / pre-screen
Same form as /equipment-financing and /merchant-cash-advance. The desk reads the project, the owner, the projected debt service, and routes the file to SBA / 504 alongside the parallel product tickets.
Week 1
Bank + CDC underwriting
The bank senior piece and the CDC piece both underwrite in parallel. SBA pre-screen is a third leg on the file. The owner hands off three years of P&L, a current YTD, the existing mortgage note (for refis), and the build-out pro-forma (for new builds).
Week 2–4
SBA pre-screen + size-cap confirmation
The SBA confirms the size standard (revenue OR employee, never assets — see below), the affiliate rules, and the eligible-use rules. This is the long pole on the file; lender-side delays here back up the closing date.
Week 3–5
CDC application + debenture sale
The CDC packages the debenture and sells it on the secondary market. The fixed rate pegs to the 10-year Treasury at debenture-sale date. The bank closes in parallel with the senior piece.
Week 5–10
Closing + first advance
Closing funds the senior and the first CDC advance — typically 50% of project. For pure-real-estate purchases, this is the entire project. For construction / build-out, the second advance (the remaining 40% against TI and soft costs) lands 9 / 12 months later as the project bills out and the certificate of occupancy is issued.
Week 8–12
If your clinic needs cash in 7–14 days, MCA is the bridge. 504 is the parallel long-term / fixed-rate / owner-occupant path on the same intake — not a competing product. The desk sizes the working-capital gap to /merchant-cash-advance and the fixed-asset / real-estate / build-out to 504, on the same coordinated ticket.
See what the real monthly looks like
Plug in the project, the rates, and the terms.
Drop in your $1.0M – $3.0M med-spa project, your 10% down, and the indicative rates for the senior bank piece and the CDC second-mortgage. The widget splits the financed amount 50/40 across the two tranches — live math on your projected SBA + bank + CDC monthly before you spend sixty seconds on intake.
Self-qualify in sixty seconds
See what the real monthly looks like.
Drop in your project cost, your down payment, the two tranche rates, and the two terms. The widget splits the financed amount 50/40 across the bank senior piece and the CDC second-mortgage — live math on your projected SBA + bank + CDC monthly before you spend sixty seconds on intake.
$1.0M – $3.0M med-spa purchase / build-out typical.
10% is the SBA owner-equity read; QPL / green / manufacturing projects can drop below.
Prime or SOFR-based; check your bank’s current quote.
10-yr Treasury at sale + ~300 bps spread on a pegged debenture.
20-yr is the typical real-estate tranche; 10-yr on the construction second advance.
Senior bank pieces typically run 5 – 15 years; the SBA doesn’t pin this.
Senior tranche · $540,000 principal · 120 mo · ~9.5%
$6,987/mo
First-position bank loan; this is the bank’s amortizing read against their senior collateral position.
CDC tranche · $432,000 principal · 20-yr · ~7.5%
$3,480/mo
Fixed-rate second mortgage; the rate pegs to the 10-yr Treasury at debenture sale, so this number locks.
Combined monthly
$10,468/mo
What the desk reads as your 504 monthly; this is the figure to plug into the DSCR calculation and the projected P&L.
This widget is illustrative — submit intake for a real quote. The desk prices the term sheet against your actual file; the rates above are first-pass orientation, not a commitment to fund.
Send the file to the desk
One short form. Three coordinated tickets.
Tell us the clinic, the project, and the situation. We respond inside one business day with a routing read and a 504 / equipment / MCA-funded-path estimate against the program anatomy above.
See how this compares to equipment financing and MCA →
Independent vertical-credit desk · MedGuild Capitalis not a lender. SBA 504 program anatomy, qualifying profile, timeline, and eligible-cost descriptions above are illustrative of the desk’s first-pass sizing — not an offer to fund, not a comment on any applicant’s specific file, and not a guarantee of term-sheet outcomes from any listed CDC / SBA-lender partner.