• What is the differences between SBA 504 and SBA 7a?

    Team Make A Wish

     SBA 504SBA 7a
    Goal of programEconomic development and job creationCapital access
    PurposeFor real estate/equipment
    No working capital on acquisitions
    Working capital is allowed under SBA 504 debt refinance
    Business purposes (equipment, working capital, business acquisition, real estate, etc.)
    Loan sizeBank: Capped at 65% of total cost
    CDC: Capped at $5M for conventional project and $5.5M for green projects
    Multiple SBA 504 loan under Green projects is allowed
    $5M for most projects and
    $5.5M for manufacturing
    Loan-to-valueBank: minimum of 50%
    CDC: maximum of 40%
    Maximum of 90%
    Debenture termBank: Variable or fixed rate, at least 7-year term for a 10-year CDC loan, and at least 10-year term for a 20-year CDC loan
    CDC: fixed rate, 20 years for real estate, and 10 years for equipment
    Variable or fixed rate
    Term between 7 and 25 years depending on use of funds and applicable collateral
    Lien positionBank has exclusive first lienTypically bank holds first lien with guarantee from SBA
    Combination with USDACannot be combinedCan be combined
    Payment of other SBA loanCannot be used to pay 7a loanCan be used to pay SBA 504
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