Compare SBA 504 and SBA 7(a) financing for eligible businesses, from commercial property and long-life equipment to acquisitions and working capital.
Eligible uses, program structures and underwriting requirements differ.
Can finance eligible owner-used commercial property purchases, construction or improvements, and certain long-life equipment. It involves a senior lender and Certified Development Company (CDC), with long-term fixed-rate financing for the CDC/SBA portion. Eligible CDC loans may reach $5.5 million.
Can fund eligible business acquisitions, working capital, owner-used commercial real estate, equipment and some debt refinancing. The general maximum loan is $5 million. Participating lenders make loans with an SBA guaranty.
Eligible owner-used real estate or fixed-asset projects may be considered for 504 or 7(a), subject to occupancy and loan requirements.
7(a) may finance eligible business purchases and working capital. 504 cannot fund ordinary working capital or inventory.
The CDC portion of 504 may have 10-, 20- or 25-year maturities. 7(a) loan terms depend on the use. Rates and equity vary by lender and transaction.
SBA eligibility, project purpose, creditworthiness and repayment ability must be reviewed. Passive rental real estate investments generally do not qualify for SBA 504.
Generally, no. Eligible working capital and inventory financing may be explored through SBA 7(a) or another program.
Eligible multi-purpose transactions may qualify for review, depending on ownership, occupancy, repayment ability and lender underwriting.
No. Some typical structures start at that level, but new businesses or special-purpose properties may require more equity.
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