SBA Loan Programs Overview
SBA 7(a) Loan
The flagship SBA loan program is the most common and flexible option for small businesses.
- Purpose: Working capital, equipment, real estate, debt refinancing, business acquisitions
- Max Amount: $5 million
- Terms: Up to 10 years for working capital/equipment; up to 25 years for real estate
- Guarantee: SBA guarantees 85% (loans <150K) or 75% (loans >$150K)
- Rates: Variable or fixed; tied to Prime or SOFR + a spread (capped by SBA)
- Down Payment: Typically 10% to 20%
- Best For: Businesses needing flexible, all-purpose financing
SBA 7(a) Blended Rate Loan
A variation of the standard 7(a) that splits the loan into portions with different rates or structures often combining a fixed and variable rate component.
- Purpose: Same as 7(a) ” working capital, real estate, equipment, acquisitions
- Structure: Part of the loan is fixed-rate, part is variable; blended to reduce overall rate risk
- Benefit: Borrowers get rate stability on a portion while potentially benefiting from lower variable rates on the rest
- Best For: Businesses wanting partial rate predictability without fully committing to a fixed rate
SBA 504 Loan
Designed specifically for major fixed asset purchases between a bank, and the borrower.
- Purpose: Owner-occupied commercial real estate, heavy equipment, large capital improvements
- Max Amount: $5.5 million (up to $5.5M for manufacturing or energy projects)
- Structure: Three-part split
- 50% from a private lender (bank/credit union)
- 40% from a CDC (SBA-backed, fixed rate)
- 10% borrower down payment (may be higher for startups or special-use properties)
- Terms: 10, 20, or 25 years (CDC portion); fixed rate on CDC portion
- Rates: Below-market, fixed rates on the CDC portion
- Best For: Established businesses purchasing real estate or major equipment with the lowest down payment for commercial real estate
Expansion Loans
Not a single SBA-specific product, but a category of financing used to fund business growth. These can be structured through several vehicles:
- SBA 7(a) or 504 used for expansion purposes (new locations, added capacity)
- Conventional expansion loans offered by banks and credit unions
- Purpose: Opening new locations, scaling operations, purchasing additional equipment, hiring, entering new markets
- Terms & Rates: Vary by lender and structure
- Best For: Businesses with proven revenue and a clear growth plan