Small Business Administration Loans

The SBA has two main loan programs in which the Bank participates. The 7(a) program partially guarantees a loan made to you by the Bank. The guarantee enhances an otherwise marginal loan or provides necessary benefits to you, such as longer terms and more liberal extensions of credit. The second program is the 504 loan. In the 504 program, a bank lends you money to acquire a fixed asset like a building or equipment, up to 50% of the value of the asset. The SBA then lends you up to 40% of the value of the asset in a junior position to the Bank's loan. Generally, the borrower must provide 10% of the project costs to round out the financing package. The 504 loan carries either a ten or twenty year fixed rate that is very competitive.