SBA loans provide financing for almost every business purpose, including real estate, equipment, working capital and business acquisition. Usually the SBA 7(a) loan gets all the attention, and it is the most commonly used SBA loan. 7(a) loans are designed for working capital, and funds can be used toward purchasing a business. However, there are many benefits to the 504 Loan Program that should not be overlooked, even when purchasing a business.
The SBA 504 and 7(a) loan guarantee programs are designed for different business needs, with different goals in mind. The 504 loan is intended for economic development; therefore, its use is restricted to real estate and fixed asset purchases, as these promote job creation. The 7(a) loan can be used for working capital for almost any business expense. While the 7(a) loan can also be used for real estate purchases, the 504 loan is better suited for this purpose.
Community Business Finance's mission is to encourage economic development throughout Texas and Louisiana. We are dedicated to borrower education as well as fostering lender-CDC partnerships for the benefit of businesses in our communities. In carrying out this mission, Community Business Finance has recently had several opportunities to discuss the 504 Loan Program with financial advisors, lending institutions and businesses.