Choose SBA 7(a) when eligible working capital, acquisition costs or a mixed-use project drive the financing need. Compare SBA 504 when owner-occupied property or long-life machinery is the core investment. Manufacturers should compare both structures using a complete project budget, not just the advertised interest rate.
| Decision | SBA 7(a) | SBA 504 |
|---|---|---|
| Uses | Eligible working capital, equipment, real estate, acquisitions and refinancing | Eligible major fixed assets and qualifying refinancing; not inventory or ordinary working capital |
| Financing structure | Lender loan with SBA guarantee | Usually senior bank loan + CDC debenture + borrower contribution |
| Maximum | Generally $5m gross loan; delivery-method and affiliate limits apply | CDC debenture generally up to $5m; eligible manufacturer projects up to $5.5m |
| Rates | Fixed or variable within applicable SBA limits | CDC debenture fixed; senior bank loan priced separately |
| Maturity | Up to 25 years for real estate; other uses generally up to 10 years, subject to rules | 10-, 20- or 25-year debenture as appropriate to the asset/project |
| Equity | Depends on use, delivery method and lender underwriting | Often starts at 10%; more may be required |
| Best first question | Does the requested use qualify, and can cash flow repay the full debt? | Does the property/project qualify, and what is the combined bank + CDC cost? |
Sources: SBA 7(a) overview, SBA 504 overview and current origination SOP. Lender quotes and eligibility determine the final structure.
Example 1: buying the building you occupy
Illustrative $2 million eligible property project: a 50/40/10 structure means $1 million senior bank financing, $800,000 CDC debenture and $200,000 borrower contribution before any separately funded costs. Compare that with a 7(a) offer using actual fees, amortization, variable-rate exposure, prepayment terms and any senior-loan balloon. Do not apply the CDC rate to the entire project.
Example 2: inventory plus equipment
A manufacturer needs $600,000 of machinery and $300,000 of operating cash. A 7(a) structure may address eligible combined uses. A 504 structure would need separate eligible working-capital financing. Obtain quotes for both complete packages; fewer loans can simplify a closing, but each lender still needs a supported repayment analysis.
Where MARC and ITL fit
MARC serves working-capital needs. It cannot fund fixed assets just because another program permits them. Made in America ITL is another comparison for eligible manufacturing expansion. Neither product name creates extra independent 7(a) capacity.
Fees can change the comparison
For FY2026, the manufacturer upfront 7(a) fee waiver is limited to eligible loans of $950,000 or less and explicitly excludes MARC. It does not waive fees on a $3 million loan. The annual 0.55% SBA lender service fee cannot be passed to the borrower. See the FY2026 notice and our 2026/2027 fee guide for dates, exclusions and examples.
For approvals from October 1, consult the FY2027 fee changes. Zero SBA fees do not eliminate lender, CDC, third-party or interim-financing costs. Get those costs itemized.
Questions to ask before accepting a term sheet
- Which portion is fixed, which can change, and what benchmark and spread apply?
- What is the monthly payment on each facility and the combined annual debt service?
- What equity contribution is required and which sources are acceptable?
- Are there prepayment charges, a balloon, financial covenants or annual reviews?
- What must be completed before approval, closing and final debenture funding?
- How do existing loans and affiliates affect available capacity?
The stacking guide explains July 2026 coordination and a larger project example. Gather the application documents before comparing lender offers.
If the project replaces existing debt, review the manufacturing refinancing guide for original-use documentation, payoff information and program-specific eligibility questions before comparing offers.
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