Loan Resources

You can use a 504 loan for a range of assets that promote business growth and job creation, including the purchase or construction of:

• Existing buildings or land
• New facilities
• Long-term machinery and equipment

Or the improvement or modernization of:

• Land, streets, utilities, parking lots and landscaping
• Existing facilities

A 504 loan cannot be used for:

• Working capital or inventory
• Consolidating, repaying or refinancing debt
• Speculation or investment in rental real estate

Most common SBA loan programs include 7(a) and 504 loans where the Small Business Administration guarantees a portion of SBA loans.

The 7(a) Loan Program, SBA’s most common loan program, offers financial help for small businesses with special requirements. A good option when real estate is part of a business purchase, it can also be used for:

• Short- and long-term working capital
• Refinancing current business debt
• Purchasing and installation of machinery and equipment
• Purchasing furniture, fixtures and supplies

The maximum loan amount for a 7(a) loan is $5 million. Key eligibility factors are based on what the business does to receive its income, its credit history, and where the business operates. Your lender will help you figure out which type best suits your needs.

To be eligible for 7(a) loan assistance, businesses must:

• Operate for profit
• Be considered a small business, as defined by SBA
• Be engaged in, or propose to do business in, the United States or its possessions
• Be able to demonstrate a need for a loan
• Use the funds for a sound business purpose
• Not be delinquent on any existing debt obligations to the U.S. government
• Be creditworthy and reasonably assure repayment of the loan

Some businesses may not qualify for a 7(a) loan. Read more about terms, conditions and eligibility.

Basic uses for the 7(a) loan include:

• Long- and short-term working capital
• Purchase of equipment, machinery, furniture, fixtures, supplies or materials
• Purchase of real estate, including land and buildings
• Construction a new building or renovation an existing building
• Establishing a new business or assisting in the acquisition, operation or expansion of an existing one

Refinancing existing business debt, under certain conditions

The contents of the loan application vary depending on the size of the loan and the lender's processing method. When you’re ready to apply, work with your lender to determine which documents you're required to provide.

The 504 Loan Program provides long-term, fixed-rate financing for major fixed assets that promote business growth and job creation. 504 loans are available through Certified Development Companies (CDCs), SBA's community-based partners who regulate nonprofits and promote economic development within their communities. CDCs are certified and regulated by SBA. The maximum loan amount is $5.5 million. For certain energy projects, the borrower can receive a 504 loan for up to $5.5 million per project, not to exceed three projects or $16.5 million total.

To be eligible for a 504 loan, your small business must:

• Operate as a for-profit company in the United States or its possessions
• Have a tangible net worth of less than $15 million
• Have an average net income of less than $5 million after federal income taxes for the two years preceding your application

Other general eligibility standards include falling within SBA size guidelines, having qualified management expertise, a feasible business plan, good character and the ability to repay the loan.

Loans cannot be made to businesses engaged in nonprofit, passive or speculative activities. For additional information on eligibility criteria and loan application requirements, contact a Certified Development Company in your area.