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Comparison of Two Types of SBA Loan

Two major SBA loan programs consist of SBA 504 and 7(a). Both loans are designed for different use of proceeds. Compare them and apply for a better program for your business.

504 Loan Program

7(a) Loan Program

01

Designed for fixed assets (owner occupied real estate, machinery, and FF&E) purchase and refinancing of existing debts

02

Fixed below market rate: 

10, 20, or 25-year maturity

03

SBA guaranty fee:

0.5% on the guaranteed portion

04

Up to 90% financing

05

Prepayment penalty up to 10 years for a 25-year maturity and penalty up to 5 years for a 10-year maturity loan

01

Designed for working capital, inventory, and goodwill purchase

02

Variable or fixed rate adjusted by Wall Street Journal Prime Rate; 

up to 25-year maturity

03

SBA guaranty fee: 

2 - 3.75% on the guaranteed portion

04

75-80% financing typically;

maximum up to 90%

05

Prepayment penalty for 3 years

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