Major Differences Between 7(a) and 504 Loans

SBA 7(a) and 504

  7(a) Loans 504 Loans

Use Of Funds

To purchase real estate and/or business assets, working capital, business acquisition, partner buyout, refinance.

To purchase or construct owner-occupied commercial real estate or equipment.

Max. Loan Amount

$5 Million

$20+ Million

Structure

One bank loan

  • Bank Loan
  • CDC Loan

Required Injection

Minimum of 10%

  • Existing Business - 10%
  • Start-Up or Special-Use Property - 15% 
  • Start-Up & Special-Use Property - 20% 

Interest Rate

Maximum of 2.75% above Wall Street journal Prime, floating

Fixed rates determined by the Lender and CDC

Term

Up to 25 years

Real Estate

  • Lender Loan - up to 25 years
  • CDC Loan - 20-25 years

 

  • Lender and CDC Loans - 10 years

Prepayment Penalty

Declining 3 Year Prepayment Penalty

Declining 10 Year Prepayment Penalty

Collateral

  • Subject property
  • Additional collateral may be required by the SBA
  • Lender Loan: 1st mortgage on subject property
  • CDC Loan: 2nd mortgage on subject property

Processing Fees

Based on loan amount; between 2.00% - 3.75%

  • SBA Guaranty Fee: 0.50%
  • CDC Processing Fee: 1.50%
  • Funding Fee: 0.25%
  • Bond Broker Fee: 0.40%

For more information please contact our SBA Lending Team : 

 

MISSOURI – St. Louis
Carolyn K. Gegg
VP of SBA Lending
Cell Phone: (636) 628-6984
Email: CGegg@MyFortuneTeam.com

KANSAS- Kansas City
Patricia Case
VP of SBA Lending
Phone: 816-337-9205
Email: PCase@MyFortuneTeam.com

INDIANA – Indianapolis
Joseph Reynolds
VP of SBA Lending
Phone: 317-506-7718
Email: JReynolds@MyFortuneTeam.com

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