Ben Tenpenny
Capital City Bank

In its mission statement, the Small Business Administration (SBA) states its purpose has always been to help Americans start, build and grow businesses.

TO AID AND ASSIST small businesses in achieving growth and success, there are two primary loan types offered by SBA today—504 and the 7a loans.

504 loan—This loan is for lending on a new purchase, construction or a refinance of hard assets such as land, buildings and equipment. Borrowers can get into these loans for as little as 10% down for most projects and can also have as much as 40% of the project placed on a long term 10 or 20-year fixed rate loan.

7a loan—These loans are more flexible and used more for working capital, business purchases and business startups. Interest rates and terms will vary, but generally loan maturities will be 5-10 years.


Q. Are these SBA loans from the Government?
A 504 loan is a combination of a loan with your local lender and a direct loan from the SBA that is serviced by a local Certified Development Company. 7a loan funds are offered through local financial institutions, such as Capital City Bank, which participate in a variety of SBA lending programs. 7a loans are backed by a partial guaranty from the SBA, but are made by and serviced by the financial institution.

Q. What does that mean to me?
With a 504 loan, the borrower gets the benefits of putting as little as 10% down and also having as much as 40% of the amount borrowed locked into a fixed rate loan of either 10 or 20 years. Utilizing the SBA’s 7a guarantee makes it less risky for the financial institution to make the loan and, therefore, easier for the borrower to get approved.

Q. Do my borrowing needs fit into the SBA programs?
Most borrowing needs can fit into an SBA loan program. From business startups, buying an existing business, equipment purchases, real estate purchases, construction, remodeling, leasehold improvements, and working capital to debt consolidation; all are examples of eligible uses of proceeds for an SBA loan.

Q. How do I apply?
The process is similar to applying for a conventional commercial loan. An application containing financial statements, financial projections and a detailed business plan outlining how you intend to pay the loan back will be required.

Ben Tenpenny is vice-president and commercial lender at Capital City Bank, a full-service bank that focuses on serving individuals and small to mid-sized businesses.