How to Grow Your Small Business with an SBA Loan: 7(a) vs. 504 Programs

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Small businesses are the backbone of the economy, but securing the capital to grow can be a challenge. If you’ve found it difficult to qualify for a conventional bank loan, an SBA Loan might be exactly what you need.

Government-guaranteed financing through the Small Business Administration (SBA) offers lower down payments and more flexible terms than traditional commercial loans. At Doos Mortgage, we specialize in helping entrepreneurs navigate the two most popular programs: the SBA 7(a) and the SBA 504.

Choosing the Right Program

1. SBA 7(a) Loan: The Most Versatile Option

The 7(a) is the “Swiss Army Knife” of business loans. It can be used for almost any legitimate business purpose, including:

  • Working Capital: Managing day-to-day operations and inventory.
  • Business Acquisition: Buying or expanding an existing business.
  • Debt Refinancing: Trading high-cost business debt for a more manageable rate.
  • Equipment & Real Estate: Purchasing the tools or space you need to thrive.

2. SBA 504 Loan: For Major Fixed Assets

If you are looking to purchase owner-occupied commercial real estate or expensive, long-term machinery, the 504 program is designed for you.

  • Focus: Long-term, fixed-rate financing for major assets.
  • Property Requirements: The business must occupy at least 51% of an existing building or 60% of a new construction project.
  • Job Creation: This program often requires a focus on community economic development or job creation.

Do You Qualify? (Eligibility Requirements)

To qualify for an SBA loan through Doos Mortgage, your business must meet these core standards:

  • For-Profit Status: Must be a legal, for-profit small business operating in the U.S.
  • Repayment Ability: You must demonstrate strong enough cash flow to cover the new loan payments.
  • Personal Guarantee: Any owner with 20% or more equity must provide a personal guarantee.
  • Credit Elsewhere: You must show that you cannot reasonably obtain similar credit terms without the SBA’s guarantee.

What You’ll Need to Apply

SBA loans are thorough, and a complete documentation package is key to a fast approval. Be prepared with:

  • Tax Returns: 3 years of federal business and personal tax returns.
  • Financial Statements: Recent Profit & Loss (P&L) and Balance Sheets.
  • Business Plan: A detailed plan including financial projections for the next 2-3 years.
  • Personal History: Resumes for all principal owners highlighting relevant industry experience.

Partner with Doos Mortgage

Navigating SBA requirements can feel overwhelming, but you don’t have to do it alone. We compare offers across multiple lenders to ensure you get the best possible rates (typically based on the Prime Rate or Treasury + a spread).

Ready to take your business to the next level? Apply for an SBA Loan Pre-Approval Today!