What’s the difference between a 504 Loan and an SBA 7(a) Loan?

Both 504 loans and 7(a) loans are guaranteed by the SBA. However, 504 loans require a lower down payment and offer fixed rates with repayment terms over 25 years (real estate) or 10 years (machinery/equipment). In contrast, 7(a) loans often have significantly higher and/or adjustable rates, and usually cost more over the loan’s life. REDCO can provide a cost comparison specific to your project if desired. Further, whereas a 504 Loan is typically secured by the assets being financed, SBA 7a Loans may require pledging additional assets, including personal assets.