SBA LOAN

SBA loans are partially guaranteed by the U.S. Small Business Administration (SBA) to help small businesses secure financing when they might not qualify for a traditional loan from a bank or other lender.

SBA 7(a) loans are the most prevalent type of SBA loan. They can be employed for various purposes, such as working capital, equipment purchases, and real estate. The maximum loan amount for SBA 7(a) loans is $5 million, with the SBA guaranteeing up to 85% of the loan amount.

Additionally, a distinct category within the SBA 7(A) loan framework exists – the Pilot Loan Program, also referred to as the SBA Community Advantage loan. This particular type of SBA 7(a) loan aims to support small businesses in underserved communities. By broadening the range of lenders who collaborate with the SBA, the Pilot Loan Program can extend its reach to communities that might not be eligible for conventional loans.

SBA 504 loans are specifically designed for real estate and equipment purchases. They are offered in partnership with a Certified Development Company (CDC), which is a non-profit organisation that supports economic growth within a specific area. The maximum loan amount for SBA 504 loans is $5.5 million, and the SBA guarantees up to 40% of the loan amount.

The primary differences between SBA 7(a) and SBA 504 loans lie in their intended uses and maximum loan amounts. SBA 7(a) loans offer greater flexibility and can cater to a broader range of purposes, whereas SBA 504 loans are specifically aimed at real estate and equipment purchases. Moreover, the maximum loan amount for SBA 504 loans is marginally higher than that for SBA 7(a) loans.

Please note that we are business plan writers, not SBA lenders. However, we have had clients who obtained loans from Fountainhead, Heritage Bank of Commerce, and numerous community lenders. Although we are not lenders ourselves, we can offer guidance on your eligibility and assist in preparing a business plan that any SBA lender would require to approve a loan!

Official SBA information on SBA 7(A), SBA Pilot Loan and SBA 504 Loan.