SBA Loans Simplified: 7(a) vs. 504

Every business has unique funding needs, and the choice between SBA 504 and 7(a) loans can make all the difference. We’ve outlined each loan’s benefits, limitations, and ideal use cases—along with their key features, main differences, and answers to frequently asked questions. Give yourself the clarity and confidence to choose the best solution for your business.

SBA Loans at a Glance

SBA loans are government-backed financing options designed to help small businesses access the capital they need to grow. These loans are provided by participating lenders (such as BayFirst) and partially guaranteed by the Small Business Administration (SBA), reducing the risk for lenders and making funding more accessible to business owners.

SBA loans can be used for a wide range of purposes, including purchasing real estate, financing equipment, supporting working capital, or even refinancing existing debt. Two of the most popular options—the SBA 7(a) and SBA 504 loans—offer flexible solutions tailored to different business needs. With competitive interest rates, longer repayment terms, and lower down payments compared to traditional commercial financing, SBA loans are an attractive option for businesses seeking to make smart investments in their future.

7(a) vs. 504

  SBA 7(a) Loans SBA 504 Loans
Maximum Loan Amount $5 million $5 million
  • In some cases, up to $5.5 million if project qualifies as manufacturing and energy-efficient
Loan Approved Uses
  • Refinance existing business debt
  • Working capital
  • Business acquisitions
  • Fund new construction and renovations
  • Purchase new equipment
  • Partner buy-outs
  • Purchase owner-occupied commercial real estate
  • Purchase commercial real estate or equipment
  • Building expansion or renovations
    • Purchase land or fund new construction
  • Purchase fixed assets from business acquisition
Loan Terms Non-Real Estate: Up to 10 years


Real Estate: Up to 25 years



Loan terms can be blended if the debt includes both real estate and non-real estate debt		 Equipment:10-, 20- and 25-year terms
(Based on if the equipment is new or used and useful life declaration from manufacturer or appraiser)


Real Estate: Up to 25 years


Mixed-use loans can have blended terms, but typically the longest term is used based on the largest use of proceeds as a percentage of the loan
Typical Loan Structure Bank loans 90% of the project, borrower provides a 10% down payment Bank loans 50% of the project, CDC (SBA) loans 40% of the project, and borrower provides a 10% down payment
Interest Rate Interest rate is often variable, although lenders can offer a fixed interest rate Lenders may offer variable or fixed rate options. The Interest rate for the CDC portion of the loan is fixed
Down Payment Typically 10%, but can be more
(No down payment is required by the SBA for a commercial real estate loan)		 Minimum 10% down payment required
Loan Fees The SBA Guarantee fee ranges from 3.5% to 3.75% of the guaranteed portion of the loan
  • Other fees include packaging fees, third party reports, lien filings, title charges, etc. (closing fees can be incorporated into the loan)
 2% - 4% of total the total financing
  • Other fees include packaging fees, third party reports, lien filings, title charges, etc. (closing fees can be incorporated into the loan)
Processing Time Expect around 60 days* Expect around 90 days*
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Why BayFirst?

As a top national SBA lender with over $2 billion in SBA loans funded, BayFirst is your trusted partner for financing success. Our team of SBA loan experts and expeditors combines advanced technology, a streamlined process, and Preferred Lender status to deliver your funds quickly and efficiently. We specialize in SBA loans under $150,000 through our unique Bolt Loan—which is a 7(a) loan often delivered within 10 days of applying.* We provide personalized service and expertise your business deserves. When you choose BayFirst, you're working with a proven leader committed to powering your business growth.

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Need more answers?

See our answers to your most common SBA questions.

SBA 504 loans are primarily used for purchasing or improving fixed assets like real estate and equipment, offering fixed interest rates and long-term financing. In contrast, SBA 7(a) loans are more versatile, allowing for uses such as working capital, inventory purchase, debt refinancing, and business acquisition, typically with variable interest rates.

Both SBA 504 and SBA 7(a) loans offer maximum loan amounts up to $5 million. However, certain energy projects and small manufacturers may qualify for SBA 504 loans up to $5.5 million.

Yes, SBA 7(a) loans can be used to refinance existing business debt, providing flexibility for business owners to restructure their financial obligations.

For those looking to refinance existing debt under $150,000, our BayFirst Bolt loan is a great option.

The repayment terms for SBA loans vary based on the loan type and its purpose, offering flexibility to meet different business needs.

SBA 504 Loans:

  • 10 years: For equipment or other fixed assets with a shorter useful life.
  • 20 years: For real estate purchases or significant renovations.
  • 25 years: For real estate projects requiring longer-term financing.

SBA 7(a) Loans:

  • Up to 10 years: For working capital, inventory purchases, or equipment financing.
  • Up to 25 years: For loans used to purchase real estate or for construction projects.

Yes, BayFirst proudly offers both SBA 504 and SBA 7(a) loans to support a wide range of business financing needs. our team of SBA loan specialists can guide you through the process and help you choose the loan that best suits your goals. As an experienced SBA Preferred Lender, BayFirst is committed to making the financing process smooth and efficient.

Absolutely! BayFirst provides hands-on guidance throughout the application process for both SBA 504 and SBA 7(a) loans. Our SBA specialists work closely with you to ensure your application is complete and meets all requirements, helping you navigate documentation, timelines, and approval steps to secure funding as quickly and efficiently as possible.

Though the requirements will vary based on the type of loan and size of your business, you’ll typically need to provide information including your business's financial statements, tax returns, credit history, and a business plan. Our team is here to guide you through the process and help you understand the documentation needed during each step of the way.

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*Funding times may vary.