SBA 7a vs 504

At First Bank of the Lake, we are proud to offer government-guaranteed Small Business Administration (SBA) 7a and 504 loans.

Use the chart below to discover the key differences between these two SBA loans and learn when you should consider each program.

The 7a loan is the SBA’s most popular loan program for small business owners and many who would not otherwise qualify for a conventional small business loan find that they qualify for the SBA 7a program. While many people mistakenly think that this loan is only for those starting a new business, the SBA 7a loan is also an excellent financing tool for those who want to expand an established business, buy an existing business, purchase a building, or finance a construction project.

For more information, read our SBA 7a Loan article.

Unlike the 7a loans, the SBA 504 loan program is more specific in terms of what you can use the funding for. Created by the SBA to support and encourage small business growth, the funds from this loan must be allocated toward fixed assets such as commercial real estate and equipment. These loans have low down payments and interest rates.

If you’re purchasing an existing building, expanding or building a new construction, the SBA 504 loan allows business owners to finance construction costs, closing costs and soft costs, including architectural fees, engineering, fees, surveys, title insurance and more within the loan. Machinery, equipment, furniture, fixtures, signage, landscaping and parking lots can also be included. This allows borrowers to retain more of their working capital for other expenses.

For more information, read our SBA 504 Loan article.

Contact an experienced SBA Preferred Lender like First Bank of the Lake to discuss your options.