Most U.S. small businesses with good credit, proven cash flow, and a solid business plan may qualify. Certain industries are restricted.

On average, SBA loans take 30–90 days to process, depending on the lender, loan type, and completeness of your application.

Properties designated special use by the SBA require a 15% borrower equity injection versus the 10% equity injection for conforming real estate properties. Below is a list of property types designated special use by the SBA:

a) Amusement parks;

b) Bowling alleys;

c) Car wash businesses;

d) Cemeteries;

e) Cold storage facilities where more than 50% of total square footage is equipped for refrigeration;

f) Dormitories;

g) Farms, including livestock and dairy facilities;

h) Funeral homes with crematoriums;

i) Gas stations;

j) Golf courses;

k) Hospitals, surgery centers, urgent care centers, and other health or medical facilities;

l) Hotels, motels, and other lodging facilities;

m) Marinas;

n) Mines;

o) Nursing homes, including assisted living facilities;

p) Oil wells;

q) Quarries, including gravel pits;

r) Railroads;

s) Sanitary landfills;

t) Service centers (e.g., oil and lube, brake, or transmission centers) with pits and in-ground lifts;

u) Sports arenas;

v) Swimming pools;

w) Tennis clubs;

x) Theaters and auditoriums; and

The SBA 504 Loan Program provides long-term, fixed-rate financing for major fixed assets such as property, land, and large equipment.

Check out our guide comparing SBA 504 vs 7a

The SBA 7(a) is the most flexible loan, allowing funds to be used for working capital, refinancing, acquisitions, or equipment.

There are no rules that preclude you beginning construction while waiting on an SBA authorization. However, most Senior Lender and Bridge lenders will not fund loans without an SBA authorization in place. So if you want to get started early, you will likely need to fund the project initially with your own capital. Also, keep in mind there is no guarantee on an SBA authorization so if you are counting on that authorization to complete the project you could get stuck with a half built project if the SBA for some reason doesn’t approve your project.

Hard cost of construction including materials, labors, payments to General Contractors and payments for FF&E are all eligible.

Soft costs such as third party reports, architectural and engineering plans, costs of permitting, construction monitoring etc . . are all eligible for financing.

Financing costs on the Interim/Construction loan including origination fees, title costs and interest reserves can all be financed into the total project.

Yes, your borrower will order an “As Is” and “As Completed” appraisal (which are generally combined into one report). The “As Is” provides a value of the property before the proposed improvements. The “As Completed” provides a value of the property after the proposed improvements. Keep in mind that before the SBA funds the permanent Junior Loan the CDC will inspect the property to ensure the scope of the plans approved haven’t deviated significantly from the proposed plans.

No, most likely your construction lender will only advance funds as the project is completed. Most lenders either use a third party construction monitoring company or an internal construction department to inspect the property each time your or your contractor requests a draw. They will then issue payments to you or more than likely directly to your contractor as progress is made.

It is not uncommon for construction projects to come in over budget. The SBA allows for the lender to fund up to a 10% contingency, which can help. But sometimes the contingency is exhausted too. If that happens there are two options:

1. The borrower must contribute additional capital to make up the shortfall between the approved construction budget and the actual cost.

2. Or Your lender can ask the CDC, to request a change to the SBA authorization increasing the amounts of the loans. This is called a 327 action by the SBA.

Yes, some lenders will set aside an interest reserve at closing to cover the interest payments for the borrower during construction. The interest reserve can be financed into the overall cost of the project.

If a borrower is really efficient with an SBA 504 construction project and are able to finish ahead of schedule, the remaining funds left in the interest reserve would be sent to the borrower once the SBA debenture funds.

The short answer is yes the SBA does allow DIY (do-it yourself) construction projects. However, you will need to justify the budget in one of these three ways:

• Provide two bids by unaffiliated contractors; or

• Provide an estimate by a third-party construction management firm; or

• Provide an estimate from the lender’s internal construction management team (if they routinely manage similar construction loans).

For new construction projects the SBA requires that the Operating Company borrower occupy at least 60% of the building. This is higher than the standard 51% borrower occupancy threshold for standard SBA 504 loans not involving a new build.

When refinancing debt using an SBA 504 the amount of cash-out is limited to the following. You cannot cash out an amount that would bring the total Loan-to-Value of the financing to higher than 90%. You cannot cash out more than 18 months of eligible business expenses. Eligible business expenses can be calculate based on the previous 18 months or projections for the next 18 months.

Eligible Business Expenses:

• Salaries/wages for employees.

• Rent for business premises.

• Utilities

• Inventory purchases

Technically, not you cannot include “working capital” in your refinance. However, you can “cash-out” in a refinance up to a 90% Loan-to-Value. The “cash-out” amount allowed is based on 18 months of eligible business expenses. Eligible business expenses can be calculate based on the previous 18 months or projections for the next 18 months.

Eligible Business Expenses:

• Salaries/wages for employees.

• Rent for business premises.

• Utilities

• Inventory purchases

Yes, you can use an SBA 504 to refinance existing SBA 7a and SBA 504 loans. This change was made to the program in 2024. Previously borrowers could not refinance existing SBA debt with a new SBA loan.

Yes, equipment debt is eligible for refinancing with an SBA 504

You’ll need financial statements, tax returns, a business plan, and personal background information. APC Lending guides you through each step.

Yes, most SBA loans require collateral, especially for larger amounts. Real estate, equipment, or business assets are commonly pledged.

Loan amounts range widely: Microloans up to $50,000, SBA 7(a) up to $5 million, and SBA 504 loans have no set cap although the CDC portion of the loan is capped at $5.5 million.  

Most SBA loans involving commercial real estate go up to 25 years in most cases.  Repayment terms on working capital and equipment are usually 10 years or less.

Yes, SBA 504 loans come with prepayment penalties.  SBA 7a loan with terms greater than 15 years also have prepayment penalties.  Check out our complete guide on SBA Loan Prepayment Penalties Here.

Yes. SBA 7(a) and SBA 504 refinance programs allow qualifying businesses to refinance existing business debt at better terms.

Yes. Many franchises qualify for SBA financing,.  You can check out what franchises qualify on the SBA Franchise Directory.