Most small business owners are aware that SBA loans are one of the best sources for acquiring the funding needed to purchase equipment and to cover expenses for normal operations. There are many different types of SBA loans available to small business owners, but two of the most popular are the 7(a) loan and the 504 loans. Here are the differences between these two types of loans.
SBA 7(a) Loan
This is the most popular loan program offered by the Small Business Administration, and it is generally used to purchase furniture or equipment, to purchase an existing business, or to make business improvements to a storefront. There is a specific type of 7(a) loan which is known as the SBA Express loan which, as its name suggests, can generally be completed in a short period of time. The typical turnaround time for an Express loan is about 36 hours, as opposed to ordinary loans which might take weeks or months to fully resolve. For the most part, Express loans can be used for many of the same purposes as a traditional 7(a) loan might, but the maximum amount you can borrow under this program would be $350,000, as opposed to the ceiling of $5 million for a normal 7(a) loan.
SBA 504 Loan
When you’re interested in purchasing existing buildings or property for your business, or when you need to purchase heavy machinery or equipment, or possibly even a commercial piece of real estate, your best bet would be the SBA 504 loan. This type of loan is part of an economic development program, and the SBA offers it with the specific intention of creating jobs and promoting growth in the community. In fact, the amount of money issued in one of these loans is sometimes dependent on the creation of a certain number of jobs.
Interested in an SBA Loan?
If your business would benefit from having SBA loans, we’d like to hear from you. Contact us at Pendleton Commercial Financing so we can discuss some options which may be available to you. You might be eligible for either a 7(a) loan or an SBA 504 loan.