The two flagship SBA loan programs — 7(a) and 504 — are often confused. Both offer long terms and below-market rates, but they are built for different purposes. Here is how to tell which one fits your needs.
At a glance
| 7(a) | 504 | |
|---|---|---|
| Max loan | $5 million | $5.5 million (up to $5M per project) |
| Best for | Working capital, acquisitions, mixed use | Real estate & heavy equipment |
| Max term | 25 years (real estate) / 10 years (other) | 25 years |
| Structure | Single bank loan, SBA-guaranteed | Bank loan + CDC debenture + 10% down |
| Speed | Faster, more flexible | Slower, more paperwork |
Choose 7(a) when…
- You need working capital or want to buy a business.
- Your project mixes real estate with other uses.
- You want a single lender relationship and faster closing.
Choose 504 when…
- You are buying commercial real estate or major equipment only.
- You want the lowest possible down payment (typically 10%).
- You can tolerate a longer, more document-heavy process.
Not sure? Many borrowers start with the wrong program and lose weeks. A quick eligibility check can point you to the right one before you apply.