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SBA Loans Texas

If you’re a small business owner, chances are you’ve explored the financing options available through the Small Business Administration (SBA). SBA 504 and 7(a) loans are two of the most common loan programs. We will discuss the similarities and differences between the two and discuss how to decide which one is right for your business.

What is the difference between SBA 504 and 7(a) loans?

Here are some key differences between 504 and 7(a) loans, including their uses, how to get them, maximum loan amounts, and more.

SBA 504 Loans SBA 7(a) Loans
Loan use -Purchase or construction of buildings or land, new facilities, long-term machinery and equipment.

-Guidance for the improvement of land, streets, parking lots, landscaping, existing facilities, etc.

-Buying a property.

-Construction and repair of buildings.

-Working capital (both short-term and long-term).

-Refinancing current business debt.

-Purchase of equipment, machinery, furniture, plumbing, etc.

-Opening, acquisition, management or expansion of the company.

-Updating of funds depending on the cost of inventory and receivables.

Qualifications – Be located in the United States or its territory and conduct commercial activities.

-No for less than $15 million.

-Average net income below $5 million after federal income tax in the two years prior to application.

– Must meet SBA size guidelines, have managerial experience, have a good business plan, be in good standing, and be able to repay the loan.

– Be a business and located in or within the United States.

– Meets the SBA definition of a small business. – Invest capital.

-Used other financial resources, such as personal property, prior to applying for assistance.

-You can show the need for a loan.

-Finance should be for the rational use of business.

– Absence of delinquency of existing debt obligations to the US government.

Maximum loan amount Up to $5 million Up to $5 million depending on the type of loan.
Interest rate Attached to an increase above the current market rate on 5- and 10-year US Treasury issues. The rates are about 3% of the debt. Negotiated between lenders and borrowers, but subject to SBA limits (no SBA maximum for Working Capital Export Loan)
Turnover time Unspecified work completion time 5-10 working days (Response time for an application for SBA express loans is 36 hours, for export express loans – 24 hours)
Repayment term Loans have maturities of 10, 20 and 25 years. -Loans are usually repaid monthly, repayments include principal and interest.

-Fixed rate loans have a constant interest rate, so payments do not change.

-Amounts on floating rate loans may fluctuate as the interest rate changes.

What is right for your business?

Loan Basics 504

If you want to apply for a 504 loan, the first thing you should do is visit your local Certified Development Company (CDC). Loan 504 is available exclusively through CDCs, who are SBA’s community partners.

Loan 504 is a long-term, fixed rate financing that can, for example, be used to finance the purchase of fixed assets such as building structures, land, machinery, or equipment. The finance cannot be used for working capital or stocks, debt consolidation, repayment or refinancing, or real estate investment or rental speculation.

The SBA provides an online application list for its 7(a) loan program, as well as a library of authorization files for required documentation for 504 loan applications.

7(a) Loan basics

According to the SBA, 7(a) is the agency’s most common loan program. Loan conditions differ depending on the loan program – it offers several different types of loans under 7 (a):

The SBA does not lend itself but instead works to connect borrowers with lenders. The SBA works with various lenders to set loan guidelines and reduce their risk, making it easier for small businesses to find financing.

Tips to help you make a choice

When deciding whether a 504 or 7(a) loan is the best choice for your business, ask yourself how much financial support you need, what you plan to use the funds for, what is the financial position of your business, and what is your time frame for funding.

If you are looking for long-term, fixed rate financing to help create jobs and grow your business, then a 504 loan is likely to be your best bet. These loans are for use by businesses that buy, build or improve structures, land, streets, utilities, parking lots, landscaping or facilities, or invest in significant machinery and equipment. However, Loan 504 has restrictions on the use of funds. You should not apply for a 504 loan if you want any of the following:

And a loan calculator can help you estimate your payments and figure out which loan is best for your business.

Meanwhile, the SBA 7(a) loan program may be a good option for small businesses looking for shorter terms for funding. For example, the SBA Express Loan offers an application response time of 36 hours. Program 7(a) also offers a variety of options to meet specific business needs. For example, if you are a veteran or involved in international trade, you can take advantage of specific loans that are suitable for your business.

The 7(a) loan is best for businesses looking to build working capital, looking for working capital, or looking to refinance commercial debt. Loans can also be a good option for starting, acquiring, maintaining or expanding a business. Companies that want to build or renovate buildings or buy real estate, land, buildings, equipment, machinery, supplies, and more can also take advantage of the 7(a) loan program.

Frequently Asked Questions (FAQ)

How much capital do you need for an SBA loan?

The SBA states that businesses must have reasonable capital investment to be eligible for loans. The business owner had to invest his own resources in the business using means such as time or money.

How do you refinance an SBA 7(a) loan?

To refinance an SBA 7(a) loan, businesses must meet requirements such as:

What are the maximum terms for SBA 504 and 7(a) loans?

SBA 504 loans have maturities of 10, 20 and 25 years. SBA 7(a) loans have a maximum maturity of 25 years for real estate and 10 years for equipment, working capital or inventory loans.

What is the minimum credit score you need to get an SBA loan?

While the SBA uses credit history to determine the eligibility of companies seeking loans, even companies with bad credit may qualify for startup funding.

SBA’s District Offices in Texas

Dallas / Fort Worth District

150 Westpark Way Suite 130
Euless, TX
Phone: 817-684-5500
Fax: 817-684-5516

El Paso District

211 N. Florence Street 2nd Floor, Suite 201
El Paso, TX
Phone: 915-834-4600
Fax: 915-834-4689

Lower Rio Grande Valley District

2422 E Tyler Ave Suite E
Harlingen, TX
Phone: 956-427-8533
Fax: 956-427-8537

Houston District

8701 S. Gessner Drive Suite 1200
Houston, TX
Phone: 713-773-6500
Fax: 713-773-6550

Lubbock – West Texas District

1205 Texas Avenue Room 408
Lubbock, TX
Phone: 806-472-7462
Fax: 806-472-7487

San Antonio District

615 E Houston St. Suite 298
San Antonio, TX
Phone: 210-403-5900
Fax: 210-403-5936