What’s the Difference between SBA’s Business 504 Loan & 7(a) Loan?

The Small Business Administration (SBA) exists to aid and support local business owners struggling to compete with national and global companies. As an extension of the SBA, Certified Development Companies (CDCs) exist to carry out the mission of the SBA. Agencies like 504 Capital are proud to call ourselves CDCs, and work to boost our local economy.

504 Capital provides such support to small businesses in Virginia and North Carolina, and we’re hoping to expand our benevolent reach even further someday. In the meantime, we’re doing our part to grow the economy in our own backyard.

There’s a lot of confusion out there about business loans and finances in general. We’re here to cut through the noise and provide you with simple answers to common questions.

“What is the difference between a 504 loan and a 7(a) loan which SBA loan is right for me?”

504 SBA Loan7(a) SBA Loan

Used to finance purchase of:

  • Real Estate; Land & Buildings
  • Improvements to Land & Buildings
  • Construction Materials
  • Heavy Equipment & Machinery

Used to finance purchase of:

  • Furniture & Fixtures
  • Improvements to Leased Space
  • Acquisition of another, existing, Business
Fixed RatesFixed & Variable Rates
Detailed Business Plan RequiredSatisfactory FICO & SBSS Scores Required

Lending Amounts: $125,000—$20 Million

  • Bank: 50%
  • CDC: 40%
  • Borrower: 10%

Lending Amounts: $50,000—$5 Million

  • Borrower: 10%
  • Loan structure is variable, dependent upon risk level

Loan Terms:

  • 10 Years: Equipment
  • 20 Years: Real Estate
  • 10-20 is Typical for 504 SBA Loans

Loan Terms:

  • 7 Years: Working Capital
  • 10 Years: Equipment
  • 25 Years: Real Estate
Fund Larger Projects—Total Costs (borrower, lender, CDC combined) may be as high as $12,500,000. Get More Flexibility with Mixed Use of Proceeds—Finance intangible assets, working capital, & inventory.