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Online Banking

Government Guaranteed Business Lending Program

Small Business Administration (SBA) - Loan Comparison

There are two main SBA loan programs, the 7a and 504. There are many differences between both programs and below are some of the comparisons.

 

 7a  504
Loan Uses
  • Real Estate - purchase, construction, refinance (owner occupied) ~ must be 51% owner occupied (higher for construction)
  • Export
  • Equipment
  • Working Capital - short term and long term (Revolving lines of credit available)
  • Eligible Business Debt Refinance/Consolidation
  • Business Acquisition/Partner Buy-Out
  • Franchise lending
  • Real Estate - purchase, construction, refinance (owner occupied)
  • Equipment
Terms
  • Loan Maturity and amortization up to 25 years for real estate for entire loan
  • Prepayment Penalties - 5%, 3%, 1% prepayment fee (subsidy recoupment fee) assessed for loan maturities of 15 years or greater
  • 25-year term and amortization available for partial loan
  • Declining10-year prepayment penalty
Fees
  • SBA Guaranty Fee (payable to the SBA) up to 3.75% on the guaranteed loan portion (now waived until 9/30/21)
  • SBA packaging fee - typical fee up to $2,500 (payable to bank or broker/agent)
  • For SBA Revolving Lines of Credit - typical 1% annual line monitoring fee
  • Standard third-party fees (appraisal, environmental report, title, credit reports, etc.)
  • Brokers may charge fees
  • Debenture fees of 3.15% + Lender Origination fee up to 1% (1.5% now waived until 9/30/21)
  • SBA Third Party Lender Fee .50% (now waived until 09/30/21)
  • Bank origination fees & documentation fees
  • Standard third-party fees (appraisal, environmental report, title, credit reports, etc.)
  • Brokers may charge allowable fees
Interest Rates
  • Variable & Fixed available
  • Floors & Ceilings allowed
  • Up to 25-year fixed rate on partial loan
Equity Requirements
  • As low as 15%
  • Exceptions to fully secured loan (see Collateral section)
  • As low as 10%
  • Must be fully secured
Collateral
  • The bank must secure the loan up to the liquidation value.  If no collateral is available to be pledged by the business, personal collateral may be considered.
  • If other elements of the loan request are strong, the lender & SBA can choose to recommend the loan for approval with insufficient to weak collateral.
  • Must be fully secured

 

Tell us about your financing needs by completing the Loan Inquiry Form or speak with a lender at (520) 529-5500.  You may also contact our Government Guaranteed Lending Manager, Leticia Scearce, at (602) 603-3524.

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