SBA 7(a) & 504 LOANS
To service the unique needs of small businesses, the U.S. Small Business Administration has a range of financial tools. Two of these are the SBA 7(a) loan and the SBA 504 loan. Our lenders know these loans intimately and can help your business navigate the application process.
What are SBA 7(a) & 504 Loans?
These two loans share a lot of similarities, with a couple of important differences. Both can be used to finance real estate, construction, and equipment, but only the 7(a) loan can be used for working capital. Private lenders can help you secure either loan, but the lender you choose for a 504 loan must be a Certified Development Company. These are local lenders who have been certified by the SBA.
Interest rates for both loans are capped by the SBA, so you know you’ll never be charged above this limit. To qualify for either loan, your business has to be for-profit and operate in the United States. If your business’s net worth is $15M or less and your annual net revenue is below $5M, you fit the income requirements for the 7(a) and 504 loans. Women-owned businesses and minority-owned businesses are encouraged by the SBA to apply.
Apply
Look to one of our lenders to help you qualify for an SBA loan. We have CDC lenders and others authorized to lend through the SBA.
Qualify
There are types of businesses that don’t qualify for SBA loans, like private clubs, casinos, and churches. We can help you navigate the SBA’s requirements and get the loan that fits.
Succeed
No matter what your small business goals, we’ll help you find the financing that you need to succeed. Let’s explore your options together!
ADVANTAGES OF
SBA 7(a) & 504 LOANS
- Financial backing by the SBA encourages lenders to approve who may otherwise decline a loan application.
- The SBA 7(a) loan is flexible and can be used for a variety of expenses.
- Get 90% financing or more for property, construction, and equipment needs.
- No balloon payments due at the end of the loan term.
When is an SBA 7(a) or 504 Loan not a good fit?
If your business’s earnings are above the $5M annual limit, you won’t qualify for either loan through the SBA. Let us utilize our broad lender network to find a solution that fits your business.
Why does the SBA care about my small business?
The SBA is tasked with encouraging economic growth by supporting small businesses. These businesses create jobs, build communities, and help local economies thrive.
Where do SBA 504 loan funds come from?
These loans are compiled from three main sources: 50% comes from a private lender, 40% is from a second lender guaranteed by the SBA, and the remaining 10% comes as a down payment from the borrower.
How long does an SBA loan last?
That depends on what the purpose of the loan is. Maximum terms are 25 years for real estate, 10 years for equipment, and 10 years for working capital or inventory.