SBA Loans 504 & 7A

Unlocking Growth with SBA Loans 

Navigating the maze of loan options for SBA loans is crucial for achieving your business goals. It’s easy to feel overwhelmed, but we’re here to guide you through the process. Should you apply for an SBA 7(a) loan to cover the expenses of your expanding business, or is the SBA 504 loan the better choice for purchasing new equipment or renovating a larger space? The complexity of choosing the proper financial lifeline can be daunting and overwhelming.

 

Fortunately, Cornerstone Capital Advisors is your partner in guiding you through the process. From deciding which option is best for your business to closing the deal, we are on your side, ready to propel your success forward. Transform your business ambitions into reality. Set your business on a path to success with Cornerstone Capital Advisors today!

 

Introduction to SBA Loans 7A and 504

 

Running a small business is challenging and rewarding. But as any seasoned entrepreneur would tell you, sustainable growth often requires financial support. That’s where SBA loans come into play. Specifically, the SBA 7A and 504 loans are potent tools for helping small businesses thrive.

 

SBA (Small Business Administration) loans are partially guaranteed by the government, reducing the risk for lenders and making it easier for small businesses to get the funding they need. These loans provide essential funding for businesses that might not qualify for traditional bank loans.

 

What Are SBA Loans 7A and 504?

 

Overview of SBA Loans 7A

The SBA 7A loan program is the most popular among small business owners. It offers flexibility and supports a variety of purposes, including working capital, purchasing equipment, and even refinancing existing debt. The 7A loan can provide up to $5 million, making it a robust option for businesses at different stages of growth.

 

Eligibility for a 7A loan generally requires that your business operates for profit, meets SBA size standards, and has reasonable equity to invest. Additionally, you must demonstrate a need for the loan and use the funds for a sound business purpose.

 

Overview of SBA Loans 504

In contrast, SBA 504 loans target significant fixed assets that foster business growth and job creation. The 504 loan is ideal for purchasing real estate, machinery, and other long-term fixed assets. With a 504 loan, you can borrow up to $5.5 million, which can be a game-changer for scaling operations.

 

Comparing SBA Loans 7A and 504

  • Use of Funds: 7(a) loans are more flexible and can be used for broader purposes, while 504 loans are specifically for major fixed asset purchases.
  • Loan Structure: 7(a) loans are more straightforward, with a single loan from a lender, whereas 504 loans involve a partnership between a private lender and a CDC.
  • Interest Rates: 7(a) loans can have variable or fixed rates, while 504 loans offer fixed rates on the SBA-backed portion.
  • Guarantees: Both programs offer SBA guarantees to reduce the lender’s risk, but the guarantee structure differs.

 

SBA Loans Eligibility Requirements

While both loan types aim to support small businesses, their eligibility requirements differ. The 7A loan offers flexible criteria and can apply to various business needs. In contrast, the 504 loan has stricter requirements focused on long-term investments in fixed assets.

 

SBA Loans Amounts and Uses

SBA 7A loans can be used for working capital, equipment purchases, and refinancing debt, among other things. The maximum loan amount is $5 million. The 504 loan, however, is tailored for purchasing fixed assets like real estate or machinery, with a cap of $5.5 million.

 

Interest Rates and Terms

Interest rates and terms also vary between these two loan types. 7A loans typically have variable interest rates tied to the prime rate, while 504 loans generally offer fixed interest rates, providing more stability. The terms for 7A loans can go up to 25 years for real estate and ten years for equipment and working capital. For 504 loans, the terms usually range from 10 to 20 years.

How SBA Loans Help Small Businesses Grow

SBA Loans Funding for Working Capital

One of the most significant benefits of SBA 7A loans is their usability for working capital. This flexibility allows businesses to cover day-to-day operational costs, from payroll to inventory. Working capital is crucial for maintaining smooth business operations and ensuring a company can meet its short-term financial obligations without disruption. 

 

High working capital indicates a company’s ability to manage its current liabilities effectively, while insufficient working capital may lead to financial strain and difficulty covering essential expenses. Adequate working capital is crucial for maintaining smooth operations and seizing growth opportunities as they arise.

SBA Loans for Equipment Purchases

Both SBA 7A and 504 loans can fund equipment purchases. Whether you’re a manufacturer needing new machinery or a tech company requiring the latest software, these loans ensure you have the necessary tools to operate efficiently. Investing in modern, high-quality equipment can enhance your operational capabilities and stay competitive in your industry. 

 

New machinery can streamline production processes, reduce downtime, and lower maintenance costs, while state-of-the-art software can improve data management, customer relationship management, and overall business intelligence. This significant investment can increase productivity and, ultimately, higher profits. Additionally, purchasing essential equipment without draining your cash reserves allows you to maintain financial flexibility, which is critical for sustaining day-to-day operations.

 

SBA Loans for Real Estate Investments

Real estate is often a substantial investment for small businesses, and SBA 504 loans are designed explicitly for this purpose. Acquiring property can provide long-term stability for your business, freeing you from leasing uncertainties and allowing you to build equity over time. Owning a property eliminates the risk of unexpected rent increases and gives you greater control over your business location. 

 

Investing in commercial real estate can also benefit from property appreciation and potential tax advantages, such as depreciation deductions. With a stable base of operations, you can focus on growing your business without the distractions and potential disruptions of renting. Real estate investments secured through SBA 504 loans thus represent a robust strategy for fostering long-term growth and financial stability.

 

Investing in real estate offers stability and potential growth. However, navigating these opportunities wisely is crucial. Expert advice is indispensable for those looking to maximize their real estate investments. Cornerstone Capital Advisors stands out in providing tailored strategies for real estate investors. 

Why Cornerstone Capital Advisors?

A Trusted Advisor

Navigating the SBA loans application process can be daunting, but with Cornerstone Capital Advisors by your side, you’re not alone. We act as your trusted advisor, guiding you through every step, from application to closing. Our extensive experience with the SBA loans process ensures that you meet all criteria and submit a compelling application.

Competitive Rates and Fees

At Cornerstone Capital Advisors, securing the best rates and terms is crucial for your business’s financial health. We offer competitive rates and work tirelessly to ensure you receive the most favorable terms possible. We aim to save you money in the long run, helping you reinvest those savings into your business.

Financial Consultant Experience

Our team has extensive experience working with businesses across various industries. This deep understanding allows us to offer tailored advice and customized loan solutions that meet your needs. Whether you’re in manufacturing, retail, or tech, we have the expertise to support your financial goals.

 

Transparency and Lending Power

Transparency is a core value at Cornerstone Capital Advisors. We believe in clear, open communication throughout the loan process. You’ll never encounter hidden fees or surprises, ensuring a smooth, stress-free experience. With a lending power of upwards of $100 million, we have the resources to support businesses of all sizes.

 

Steps to Obtaining an SBA Loans with Cornerstone

 

Initial Consultation

An initial consultation is the first step in securing an SBA loan with Cornerstone Capital Advisors. We’ll discuss your business needs, financial status, and loan options during this meeting. This consultation helps us understand your goals and tailor our approach to your unique situation.

 

Application and Documentation

Once we’ve identified the best loan product for your needs, we’ll guide you through the application process. This stage involves gathering essential documents, such as financial statements, tax returns, and business plans. Our team will ensure that all paperwork is complete and accurate, increasing your chances of approval.

 

Underwriting and Approval

After you submit your application, the underwriting process begins. Our experienced team will review your documentation and assess your eligibility. We’ll inform you throughout this stage and promptly address any questions or concerns. Once approved, we’ll move forward with finalizing the loan.

 

Closing and Disbursement

The final step is closing the loan and disbursing funds. Our team will ensure prompt funding availability for your business while meeting all legal requirements. With Cornerstone Capital Advisors, rest assured that we handle your loan process professionally and efficiently.

 

Trust Cornerstone Capital Advisors for your SBA Loans 7A and 504 Needs

 

SBA 7A and 504 loans are potent tools to help your small business achieve its growth potential. These loans offer significant advantages by providing flexible funding options for working capital, equipment purchases, and real estate investments. At Cornerstone Capital Advisors, we’re committed to helping you navigate the complexities of obtaining an SBA loan. With our experience, competitive rates, and transparent communication, we aim to be your trusted partner in achieving your business dreams.

 

At Cornerstone Capital Advisors, we provide a comprehensive suite of financial services tailored to meet small and medium-sized businesses’ unique needs. From SBA loan acquisition to financial consulting, our expertise spans various solutions to foster growth and stability. We offer competitive rates and tailored loan options that align with specific business objectives, including equipment financing, working capital loans, and real estate investments. Unlock your business potential by scheduling a consultation with Cornerstone Capital Advisors today!

504 Rates

Current Blended Rates – Starting at 5.5% Fixed for 10, 15, 20, 25, 30 years (Depending on Credit)

7A Rates

Prime + 2.75% 25 Year Deal (Fixed or Variable, Depending on Credit)

Amortization

7a – 25 Years
504 – Up to 30 Years

SBA 504

(Commercial Real Estate & Equipment)

90% Fixed-Rate

SBA 7A General Purpose

ELIGIBLE BUSINESS SIZE

  • Business net worth not to exceed $15 million
  • Average net profit after taxes for 2 consecutive years not to exceed $5 million
  • Determined by industry type
  • Annual sales not to exceed range of $750,000 to $33.5 million for retail, service and agriculture
  • Number of employees not to exceed range of 100 to 1,000 for wholesale and manufacturing

LOAN STRUCTURE

  • 50% bank loan
  • 40% CDC loan
  • 10% borrower down payment
  • Loan structure negotiable; dependent on risk
  • 10% down payment (minimum)

PROCEEDS USE

  • Purchase existing building
  • Land acquisition and ground-up construction (can include soft cost development fees)
  • Expansion of existing building
  • Finance building improvements
  • Purchase equipment
  • Expand, acquire or start a business
  • Purchase or construct real estate
  • Refinance existing business debt
  • Buy equipment
  • Provide working capital
  • Construct leasehold improvements
  • Purchase inventory

PROGRAM REQUIREMENTS

  • 51% owner occupancy for existing building
  • 60% owner occupancy for new construction
  • Equipment must have minimum 10-year economic life
  • 51% owner occupancy for existing building
  • 60% owner occupancy for new construction
  • All assets financed must be used to the direct benefit of the business

COLLATERAL

  • Generally, project assets being financed are used as collateral
  • Personal guaranties of the principal owners of 20% or more ownership are required
  • Subject assets acquired by loan proceeds
  • Pledge of personal residence unless bank can justify why unnecessary
  • Personal guaranties of the principal owners of 20% or more ownership are required

FEES

  • Fees are financed in the 504 loan
  • Fees are negotiated for the 50% bank loan
  • Servicing fee (lowest allowed by SBA) for CDC plus a legal review fee
  • Fees can be financed in the 7a loan
  • Fees vary with the size of loan paired with 504 loan
  • Additional .25% charged on any loan portion above $1 million

If You’re Ready To Take Advantage Of The New Options The Small Business Administration Offers But Aren’t Sure Where To Start, Complete This Form. We’re Ready To Help.

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