Compare the 504 Loan with the 7 (a) Loan
Goldman & Klein offers both the SBA 7(a) and SBA 504 Loan programs. With up to 90% financing, low interest rates and terms up to 25 years, the SBA 504 Loan can help business owners purchase or build a facility while preserving more capital. It’s ideal for companies that are expanding or opening a second location. In general, SBA 7(a) loan proceeds can be used to purchase, construct, expand or convert industrial and commercial buildings. With maximum loan amounts up to $2 million, these commercial real estate loans offer extended terms up to 25 years and below-market interest rates.
To learn more about these loans, refer to the chart below. You can also contact a Goldman & Klein SBA Specialist to discuss our SBA loan options.
Use | Loan Amounts | Terms | Interest Rates | Eligibility | General Underwriting Criteria | Fees | Benefits
Bank Financing for Small Businesses
SBA 7(a) Loan |
SBA 504 Loan |
- Commercial real estate purchase, construction, improvements
- Occupancy requirements
- 51% Existing building
60% Initially for new building construction
- Debt refinance
- Leasehold improvements
- Equipment purchases
- Business expansion
- Business acquisition/start-up
- Working capital
|
- Commercial real estate purchase, construction, improvements
- Occupancy requirements
- 51% Existing building
- 60% Initially for new building construction
|
Loan Amounts
SBA 7(a) Loan |
SBA 504 Loan |
- Up to $2,000,000
- Commercial real estate purchase, construction, improvements
|
- Up to $5,000,000
- Higher loan amounts considered on a case by case basis
|
Terms
SBA 7(a) Loan |
SBA 504 Loan |
- Up to 25 years amortization
- Up to 90% financing on general purpose real estate
- Up to 85% financing on special purpose real estate and construction
|
- Up to 25 years amortization
- Up to 90% financing on general purpose real estate
- Up to 85% financing on special purpose real estate and construction
|
Interest Rates
SBA 7(a) Loan |
SBA 504 Loan |
- Fixed or adjustable rates
|
|
Eligibility
SBA 7(a) Loan |
SBA 504 Loan |
|
|
General Underwriting Criteria
SBA 7(a) Loan |
SBA 504 Loan |
- Management expertise
- Debt repayment ability, good credit
- Collateral - Business and/or personal assets
- Acquisition or expansion requires a minimum of 20% capital injection
- Start-up businesses require a minimum of 30% capital injection and a business plan with projections
|
- Management expertise
- Debt repayment ability, good credit
- Well-capitalized business, record of profitability
- Collateral - Bank up to 60% loan-to-value. CDC/SBA up to 40% loan-to-value, not to exceed 90% maximum combined financing
|
Fees
SBA 7(a) Loan |
SBA 504 Loan |
- No bank points
- SBA fee is based on loan amount
- Loan packaging fee
- Prepayment penalty for the first 3 years for loans with maturities of 15 years or more.
|
- Bank - Based on individual credit request
- Debenture - Fee set by CDC
|
Benefits
SBA 7(a) Loan |
SBA 504 Loan |
- Longer maturity and amortization than conventional financing
- Consideration is given for mixed collateral
- Loan to value is higher than conventional financing
- Financing available for start up businesses
- Debt coverage can be based on projected cash flow
- May be used for refinances
- May be used for working capital
- No pre-payment penalty on loans with terms under 15 years
|
- Financing availability
- Competitive interest rates
- Low down payment conserves working capital
- Fixed rates available
- Long-term amortization
|
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