Can you use an SBA loan to buy an apartment building?

No. SBA’s lending rulebook, SOP 50 10 8.1 (effective October 1, 2026), says it in one line: “Apartment buildings and mobile home parks are not eligible.” That applies to both 7(a) and 504 loans, because the eligibility section of the SOP covers both programs.

Why SBA says no

SBA lends to operating businesses. Its regulation at 13 CFR 120.110(c) makes “passive businesses owned by developers and landlords that do not actively use or occupy the assets” ineligible. Owning apartments and collecting rent is the textbook passive business. The SOP adds that businesses “primarily engaged in owning or purchasing real estate and leasing it for any purpose” are out too.

Forming an LLC, hiring a manager or calling the building your business doesn’t change that.

The exceptions, and why they don’t help

• Hotels, motels, RV parks, campgrounds and marinas can qualify if more than 50% of the prior year’s revenue came from guests staying 30 days or less. Mobile home parks get no such exception, and long-term apartments fail the test by definition.
• Licensed nursing homes and assisted living facilities that provide healthcare can qualify. Unlicensed residential facilities can’t.
• An operating business can buy a building it uses, and lease out the rest. In an existing building it has to occupy at least 51% of the rentable space, and 60% in new construction (13 CFR 120.131). That’s a rule for owner-occupied business property. A building that is mostly apartments doesn’t fit it.

What 5+ unit buyers use instead

Apartment buildings have their own financing system, and on paper it’s more generous than SBA would be:

• Fannie Mae Small Mortgage Loans, up to $9 million at 80% LTV and 1.25x coverage, non-recourse.
• Freddie Mac Optigo Conventional Small, $2 million to $10 million on 5 to 50 units, 75% to 80% LTV and 1.25x.
• HUD 223(f), 87% LTV and 1.15x coverage for market-rate properties, fully amortizing over up to 35 years, with a 5-year prepayment bar and 0.25% mortgage insurance.
• Banks and credit unions, whose terms aren’t published. Federal guidelines cap a bank’s own LTV policy at 85% for 5+ unit residential property, and banks may go above it as an exception.

Unit count and how long you’ll hold usually decide it.

Sources

• SBA SOP 50 10 8.1, effective October 1, 2026
• 13 CFR 120.110 and 120.131, eCFR current as of October 22, 2026
• Agency and HUD terms: the program page, with each source’s date