Comparison between 7(a) and 504 term SBA loans
Both SBA 7(a) Term loan plan and SBA 504 term loan plan are popular among the borrowers. The lenders prefer to use this plan for various purposes. There are some significant differences in the plans.
• The 7(a) loan plan has a change in the eligibility after the SOP changes made by the agency. In case of 504 loan plan any existing profit earning business with a net worth of $6 million or less is eligible to apply. One job creation for every $50000 of loan funds is applicable for both the plans.
• The borrowers looking for loan up to $1,500,000 should apply for the 7 (a) SBA loan program. The borrowers looking for funds up to $3,000,000 can apply for the 504 term loan
• The use of proceeds for both the plans is more or less similar.
• 85 percent of the loan is guaranteed by the chosen lender of SBA under the 7(a) plan whereas only 50 percent of the loan is provided by the lender and the rest of the loan amount is guaranteed by SBA itself under the 504 loan program.
• The rate of interest is fixed for the 7 (a) plan whereas the interest can be negotiated with the agency for the 504 term loan program.
Both the loan plans have their own terms and conditions but the purpose of the loans are same. Both the SBA loan plans are helping a lot of borrowers across the country.
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