SBA 504 & 7(a) Loans
The best terms available in commercial lending — if your deal fits inside the box.
Guardian Commercial Lending specializes in facilitating SBA loans, both 504 and 7(a). On certain projects we can finance with as little as 10% down.
For a business buying the building it operates from, SBA financing is usually the strongest option on the table. Lower down payment, longer amortization and competitive rates — the trade-off is a defined set of eligibility rules and a process with more steps than a conventional loan.
504 or 7(a)?
The 504 program is built for fixed assets: buying, building or substantially improving owner-occupied commercial real estate, and heavy equipment. It is structured in two pieces — a conventional first mortgage alongside a debenture through a Certified Development Company — which is where the low down payment comes from. The real estate portion typically amortises over a long term at a fixed rate.
The 7(a) program is broader. It can cover real estate, but also working capital, equipment, business acquisition and debt refinancing, and it accommodates situations 504 will not. Terms are shorter on non-real-estate use and the rate is more often variable.
Which one fits depends on what the money is for and how the business is structured. It is a question worth asking before you have gone far down either path.
The occupancy rule
SBA real estate financing is for owner-occupied property. Your business must occupy a qualifying share of the building — more for existing buildings than for new construction — and you can lease the balance out. Pure investment property does not qualify, which is the point at which most enquiries either fit or do not.
If your project is investment property, look at acquisition or refinance instead. If it is owner-occupied, SBA is very likely your best available terms and worth the extra paperwork.
Set expectations on timing
SBA loans involve a lender, the SBA and often a CDC, and that shows up in the calendar. Budget more time than a conventional file and get your documentation complete before submission — on SBA deals, an incomplete file does not just slow things down, it can put you back in a queue.
Will you occupy the building?
That is the first SBA question. Tell us the property and how much of it your business will use.