Lending Programs...

Above are the SBA 504 and 7(a) programs - Click them for specific information on those programs. Below find general information regarding the differences between SBA 504 and SBA 7(a) lending programs.

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"Remember that under recently introduced SBA guidelines there are stimulus changes that mean reduced paperwork and an overall streamlined application process - It's a great time to partner with the Small Business Administration..."

Ken Patterson

SBA 504 Loans are actually two loans in one. We work with the SBA to ensure both loans close at the same time. The timeline for an SBA 504 loan is typically 30-45 days.

The following is a detailed comparison of the SBA's two largest financing programs, 504 loans and 7(a) loans.

 

504 Loans

SBA 7(a) Loans

Project Size

$200,000 - $10,000,000

$50,000 - $2,000,000

Uses

. Real Estate
. Equipment

. Real Estate
. Equipment
. Business Acquisitions
. Working Capital

Interest rate

Choice of fixed or floating on 1st mortgage portion.
Fully amortized through term of loan.
Below market, long-term fixed interest rate on 2nd mortgage portion, fixed for the entire 20 years.

Floating rate based on Prime plus a spread.
Maximum rate of 2.75% over Prime.

Term/Amortization

20-25 years fully amortized.

20-25 years fully amortized.

Down Payment

10% of eligible project costs (borrowers can roll in renovations, closing and soft costs).
*an extra 5% is required for start-ups or special use properties.

20-30% for start-up or business acquisition.
10-20% for expansion.

Collateral

Only the real estate and/or equipment being financed.

Must be "fully collateralized," which frequently means a blanket lien filing on all assets of the business (A/R and inventory included, which makes getting a line of credit difficult) and the business owner's home.

Loan Fees

Just were reduced and are always lower; No SBA Guarantee Fees at all until the end of 2009

Just were reduced and are always lower; No SBA Guarantee Fees at all until the end of 2009

Technical Qualifications

For profit, non-public businesses with less than $7 million in tangible business net worth, averages less than $2.5 million in net income over the last 2 years, and personal, non-retirement, unencumbered liquid assets not to exceed
total project cost.

Various employee size, revenue and net income standards that differ from one industry to another. These complexities are too numerous to detail here, but in many instances a small business can qualify for a 504 loan
even though it would not qualify for a 7(a) loan.

USDA Business & Industry (B&I) Loan Programs
For purchase, construction or debt refinance of real estate, machinery and equipment, and working capital for eligible properties meeting the USDA criteria for rural area location (owner and non owner occupied properties eligible) - Call and speak with a SBA specialist today or complete our FastApp now.