A Snapshot Of The SBA 7A and SBA 504.
What's The Difference Between The Programs.
SBA 7A
and 504 Small Business Loan Snapshots
PROGRAM: Basic 7(a) Loan Guaranty
FUNCTION: Serves as the SBA's
primary business loan program to help qualified small
businesses obtain financing when they
might not be eligible for business loans through normal
lending channels.
It is also the agency's most flexible business
loan program, since financing under this program can
be guaranteed for a variety of general business purposes.
Loan proceeds can be used for most sound business purposes
including working capital, machinery and equipment, furniture
and fixtures, land and building (including purchase, renovation
and new construction), leasehold improvements, and debt
refinancing (under special conditions).
Loan maturity is up to 10 years for working capital and
generally up to 25 years for fixed assets.
CUSTOMER: Start-up and existing small
businesses, commercial
lending institutions SBA offers multiple variations
of the basic 7A Loan program to accommodate
targeted needs.
PROGRAM: Certified Development Company
(CDC), a 504 Loan Program
FUNCTION: Provides long-term, fixed-rate financing to
small businesses to acquire real estate or machinery or
equipment for expansion or modernization. Typically a
504 project includes a loan secured from a private-sector
lender with a senior lien, a loan secured from a CDC (funded
by a 100 percent SBA-guaranteed debenture) with a junior
lien covering up to 40 percent of the total cost, and
a contribution of at least 10 percent equity from the
borrower.
The maximum SBA debenture generally is $1 million (and
up to $1.3 million in some cases).
CUSTOMER: Small businesses requiring
brick and mortar financing.
The above are basic SBA FAQ's for specific
answers to question use our No-Obligation Professional
Loan Analysis form
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