A side-By-side at the top SBA business loans.

 

SBA 504 LOAN

(Commercial Real Estate & Equipment)

Up to 90% Financing and Fixed-Rate

SBA 7(a) LOAN

(General Purpose)

Loan Size

$125,000 to over $10,000,000

$50,000 to $5,000,000

Interest Rate

Fixed

Fully amortized through the term of the loan

Interest rates on 504 loans are set monthly at the time of funding at an increment above the current market rate for five-year and ten-year U.S. treasury issues

Variable rate adjusted quarterly

Fully amortized through the term of the loan

Interest rates are negotiated between the borrower and the lender subject to SBA maximums of:

Prime plus 2.25% if the loan maturity is less than 7 years

OR

Prime plus 2.75% if the loan maturity is 7 years or more

Eligible Business Size

Average net profit after taxes for 2 consecutive years not to exceed $3 million

OR

Meet 7(a) requirements

Annual sales not to exceed a range from $750,000 to $25 million for retail, service and agriculture

Number of employees not to exceed a range from 100 to 1,000 for wholesale and manufacturing

OR

Meet 504 requirements (temporarily applicable through 09/20/10)

Terms Available and Amortization Periods

20 years fully amortized – real estate loan

10 years fully amortized – equipment loan

No balloon payments

25 years – real estate

10 years – equipment, business acquisition

5 to 7 years – working capital

All loans are fully amortized

No balloon payments

Loan Structure

50% bank loan

40% CDC loan

10% borrower down payment

90% bank loan

10% borrower down payment

Loan Purchase

Purchase existing building

Land acquisition and ground up construction (includes soft cost development fees)

Expansion of existing building

Finance building improvements

Purchase equipment

Expand, acquire or start a business

Purchase or construct real estate

Refinance existing business debt

Buy equipment

Provide working capital

Construct leasehold improvements

Purchase inventory

Loan Program Requirements

51% owner occupancy required for existing building

60% owner occupancy required for new construction

Equipment with a minimum 10 year economic life

51% owner occupancy required for existing building

60% owner occupancy required for new construction

All assets financed must be used to the direct benefit of the business

Collateral

Generally, the project assets being financed are used as collateral

Personal guaranties of the principal owners of 20% or more ownership are required

Collateral is the subject assets acquired by loan proceeds

May require pledge of personal residence if equity available

Personal guaranties of the principal owners of 20% or more ownership are required

Loan Fees

Fees are financed in the 504 loan

Fees are negotiated for the 50% bank loan accompanying the 504 loan

1.5% CDC Processing Fee

0.50% SBA Guarantee Fee

0.25% SBA Guarantee Fee

2% for loan Guarantee up to $150,000

3% for Loan Guarantee up to $750,000

31/2% For Loan Guarantees over $750,000