October 21, 2026
SBA 504 Prepayment Penalty in Georgia: How It Works
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If you own a dental practice in Georgia and pay rent every month, you have probably wondered what it would take to buy your own office. An SBA 504 loan for a dental office in Georgia is one of the more practical ways to do it, because it is built for owner-occupied commercial real estate and usually asks for a smaller down payment than a standard bank loan. This guide explains how Georgia Small Business Capital (GSBC) typically structures these deals, what the loan can and cannot pay for, and what to line up before you apply.
Yes. An SBA 504 loan can be used to buy an existing building or land, build a new office, or renovate space your practice will occupy. The SBA describes permitted uses as the purchase, construction, or renovation of existing buildings or land, plus long-term machinery and equipment. The practice has to be an operating, for-profit business that is small under SBA size rules.
For dentists, that usually means buying a stand-alone office, a condo suite in a medical building, or a small building where you use most of the space and rent out the rest. It is a different tool from a loan meant to buy another doctor's practice, which we cover below.
You can read more about the program on our SBA 504 Loan Program page, and we also have a page written for SBA 504 loans for Georgia dentists.
A 504 loan has two loans working together. A bank or credit union provides the first lien, which means it holds the first claim on the property if the loan is ever not repaid. A Certified Development Company (CDC), like GSBC, provides the second loan. That second loan is backed by an SBA-guaranteed debenture, which is simply the long-term, fixed-rate bond that funds the CDC portion.
You put in the remaining amount as your down payment, sometimes called an equity injection. In most cases the split looks like this:
Here is a purely hypothetical example. Say a dental practice is buying a $1.8 million office building and spending another $200,000 to renovate it, for a $2,000,000 project. The table below shows how the project could be split at each down payment level. It does not include closing costs or fees, which are typically financed into the loan, and it is not an offer or a quote.
Down payment tierFirst-lien lender (50%)CDC / 504 loanBorrowerStandard (10%)$1,000,000$800,000 (40%)$200,000Special-purpose or startup (15%)$1,000,000$700,000 (35%)$300,000Special-purpose and startup (20%)$1,000,000$600,000 (30%)$400,000
Compared with a conventional loan that asks for a much larger down payment, a lower cash requirement can leave more money in the practice for equipment, staffing, and patient growth. Whether a 504 loan fits your situation depends on your financials, so we walk through the details with each owner.
The standard 504 down payment is generally 10 percent of the project cost. The requirement typically goes up by 5 percentage points if the property is considered special purpose, and by another 5 points if the practice is a startup, for a maximum of 20 percent.
Special purpose generally means a building designed for one narrow use that would be hard to sell or convert. A typical dental suite in an ordinary office building is often treated as a general-purpose property, but a heavily customized building could be viewed differently. The lender and SBA make that call, so ask early.
The CDC portion of a 504 loan is priced from a monthly debenture sale, and the rate is fixed for the loan term. The table below shows the rates posted on the GSBC website for October 2026. Rates are set monthly and change, so confirm the current figures with us before you make decisions.
October 2026 productRate25-Year Debentures6.974%25-Year Refi6.975%20-Year Debentures6.968%20-Year Refi6.969%10-Year Debentures6.600%10-Year Refi6.601%
These rates apply only to the CDC portion. The bank or credit union sets its own rate on the first-lien loan, and your total monthly payment blends the two.
A 504 loan is for fixed assets. For a dental office, the most common uses are:
The SBA states that 504 loans cannot be used for working capital or inventory. Buying another dentist's practice, including patient records and goodwill (the value of the business beyond its physical assets), generally needs a different loan structure. If you are doing both, tell us up front so we can talk through your options.
No, but your practice does need to be the main occupant. For an existing building, an owner generally must occupy at least 51 percent of the rentable space and may lease the rest. For new construction, the minimum is generally 60 percent, with limits on how much can be leased out, and some temporary leasing allowed while the practice grows into the space.
One rule to remember: loan proceeds generally cannot be used to improve space that will be leased to another tenant. Those occupancy rules apply for the life of the loan, not only at closing.
Most single-location and small group practices fit comfortably. Under the alternative size standard, a business generally qualifies if its tangible net worth is $20 million or less and its average net income after federal taxes over the last two completed fiscal years is $6.5 million or less. Other size tests may apply, and the SBA also looks at the owners, management, and ability to repay.
SBA ownership and residency rules were updated in 2026, and a new version of the SBA lending manual, SOP 50 10 8.1, applies to applications that receive an SBA loan number on or after October 1, 2026. Because policy keeps moving, we confirm current rules with every applicant rather than relying on a checklist.
Our team walks through each stage on its Our Proven Process page.
Ownership can also change your tax picture. Talk with your CPA about how it could apply to your practice, since results differ for every owner.
An SBA 504 loan can make it realistic to own your office instead of renting it, mainly through a lower down payment and a fixed rate on the CDC portion. The loan has rules on occupancy, eligible costs, and size, and rates change every month, so the best first step is a short conversation before you pick a property. If you are ready to look at numbers for your practice anywhere in Georgia, call GSBC at 404-373-8601 and our team will walk you through the options.
Possibly. A startup practice can use a 504 loan to buy or build the building it will occupy, though the down payment is generally higher, often 15 percent or more. The loan is for real estate and long-term equipment, not working capital for the first months of operations.
There is no single number. The first-lien lender and the CDC look at personal and business credit, cash flow, existing debt, and your experience running the practice. Strong, documented income helps, and we can tell you early whether the project looks workable.
Yes. In most cases an owner-occupied existing building needs your practice to use at least 51 percent of the space, and you can lease the rest to other tenants. New construction generally requires at least 60 percent occupancy.
It depends on the property, appraisal and environmental reviews, the first-lien lender, and how quickly documents are provided. Many projects take roughly two to three months from application, and ground-up construction typically takes longer. We cannot promise a timeline.
It may be possible if your existing debt qualifies and you meet the program's ownership, payment history, and other requirements. The SBA 504 Refinance Program has its own rules, so we review your loan and property before saying whether it fits.
