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SBA-504 vs. SBA 7a: A Brief Comparison

CRE Worldwide Posted on by
SBA-504(Commercial Real Estate & Equipment) SBA-7a(General Purpose)
Loan Amount
  • $125K (min.).
  • $10 million (max.).
  • $50K (min.).
  • $5 million (max.).
Interest
  • Fixed.
  • Variable or Fixed.
Terms
  • 10 years – Equipment.
  • 20 years – Real estate.
  • Up to 10 years – Equipment/Business acquisition.
  • Up to 25 years – Real estate.
  • 5 to 7 years – Working capital.
Business Size
  • Business net assets: $15 million or less.
  • Average net income for the preceding two years: $5 million or less (after taxes).
  • Annual sales: $750,000 – $33.5 million (retail, service and agriculture).
  • Number of employees: 100 – 1,000 (wholesale and manufacturing).
Permitted Use
  • Purchase/expansion of existing building.
  • Land acquisition/ground-up construction.
  • Building improvements/equipment purchase.
  • Expand/acquire/start a business.
  • Real estate purchase/construction.
  • Refinance existing business debt.
  • Equipment purchase/leasehold improvements.
  • Working capital/inventory purchase.
Occupancy
  • 51% owner occupancy (existing buildings.).
  • 60% owner occupancy (new construction).
  • 51% owner occupancy – existing buildings.
  • 60% owner occupancy (new construction).
Equipment
  • Minimum 10-year economic life.
  • Must directly benefit business.
Loan Structure
  • 10% Borrower down payment.
  • 40% CDC loan.
  • 50% Bank loan.
  • Loan structure negotiable.
  • 10% down payment (minimum).
Collateral
  • Assets being financed are used as collateral.
  • Requires personal guaranties of the principal owners (20% or more ownership).
  • Pledge of personal residence (if at least 15% equity is available).
  • Requires personal guaranties of the principal owners (20% or more ownership).

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Last Updated on October 14, 2012 by Ramin Seddiq

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