SBA 7a vs SBA 504 - Which Loan Program Fits Your Business Needs?

SBA 7a vs SBA 504 - Which Loan Program Fits Your Business Needs?

In this episode, Beau and Carey discuss the similarities and differences between SBA 7a and SBA 504 loan programs for a construction project. It suggests that for smaller deals, it may be better to choose the SBA 7a. The decision depends on the long-term goals of the sponsor, particularly if they plan to sell the building within five years. In such cases, the flexibility and shorter prepayment period of SBA 7a make it more favorable.

The SBA 504 has a 10-year prepayment period for both the bank's first lien and the CDC piece. Some banks may offer a five-year prepayment option, but the CDC's prepayment period is fixed at 10 years. The choice between the loan programs also depends on the size of the loan and the sponsor's outlook for the business and property.

Book a call to discuss SBA financing options, including both SBA 7a and SBA 504. The episode highlights the discussion that can cover various scenarios, such as startup businesses, purchasing existing businesses, buying franchises, building new office buildings, or expanding existing businesses.

Are you a real estate investor or business owner looking to expand? Book a discovery call with Beau to learn all the ways he can help you - https://sbaloans.blog/meeting

Timestamps:
(00:04) - SBA offers two loan programs: 7a and SBA 504.
(00:17) - Choosing between the two depends on the long-term goals of the sponsor.
(00:23) - If the sponsor plans to sell the building in five years, they may want to consider 7a.
(00:30) - 504 has a 10-year prepay on both the bank's first lien and the CDC piece, while some banks have a five-year prepay for 7a.
(00:42) - The smaller loan size and the sponsor's outlook on the future of their business and property are also factors to consider.

If you'd like to ask me a question about real estate, do it here -- https://investorfinancingpodcast.com/ask

💥 Thanks for watching 💥
#SBA504 #SBA504Loan #SBA504ConstructionLoan #SBA7a #sba7avssba504

About Beau: Beau Eckstein is a real estate entrepreneur, TV personality, and commercial mortgage advisor, specializing in construction financing and multi-family lending.

The video interviews we do on IFP will help you scale your real estate business and learn how to finance all your projects.

About the Channel: Want to structure your investments in the right and secure way?

Learn great insights and make the right decisions through the Investor Financing Podcast hosted by Beau Eckstein.