United States · Official program comparison · Checked October 29, 2026

SBA Loans: Choose Between 7(a), 504 and Microloans

Choose an SBA program by the use of the money, then verify the borrower and transaction rules. Start with 7(a) for a range of business needs, investigate 504 for qualifying major fixed assets, and consider a microloan for a smaller eligible purchase or cash need. Working capital, real estate and an ownership purchase do not fit all three programs in the same way.

This guide compares programs rather than promising a lender approval or a particular rate. It is for U.S. business borrowers. Mediplaton publishes from South Korea and does not accept U.S. SBA applications.

Three programs with different jobs

Program	Where to begin	Verified uses and important limits
7(a)	A participating lender; maximum loan amount $5 million.	Eligible working capital, equipment, real estate, debt refinancing and ownership changes. The program guarantees a portion of the lender's risk; the borrower still owes the debt.
504	A Certified Development Company (CDC), coordinating with a senior lender.	Qualifying major fixed assets, such as premises and long-term machinery. It cannot fund working capital or inventory. Some qualified debt refinancing is permitted; restrictions apply.
Microloan	An SBA-approved intermediary; loans up to $50,000.	Eligible working capital, inventory, supplies, furniture and equipment. It cannot pay existing debts or buy real estate. Maximum repayment term: seven years.

Sources: official 7(a), 504 and microloan pages. Loan limits are not the same as an approved project budget. For 504, have the CDC identify the applicable debenture amount, senior financing and borrower contribution rather than using one headline number as your total funding.

Commercial machinery at a fertilizer operation near Woodbine Iowa — Machinery photographed near Woodbine, Iowa, in July 2026 illustrates why equipment specifications and costs should be separated from operating expenses. The source describes a USDA business-program grant; this is not an example of an SBA-funded transaction. Photo: USDAgov, Wikimedia Commons; Public domain. Orientation corrected where needed, resized and converted to WebP. This image is not evidence of present eligibility, a loan offer or lender endorsement.

Match the use before asking about the rate

Payroll, stock and collection delays

Describe the operating gap with dates and transactions. A growing order book and a bank balance that falls before customers pay are different facts. Put supplier due dates, payroll and conservative collection dates on one calendar. Ask a 7(a) lender or a microloan intermediary about the eligible operating uses; do not add them to a 504 fixed-asset request as if every project expense were interchangeable.

Equipment and premises

Prepare the vendor quote or property proposal, installation costs and payment milestones. A 504 equipment enquiry needs to address the program's long-term asset requirements; the SBA page describes machinery with at least ten years of remaining useful life. Separate inventory and working cash from the fixed-asset project. Ask the CDC which occupancy, project and contribution conditions apply to the actual property.

Refinancing or buying a business

Show the lender the existing debt and payoff records or the draft purchase agreement. Explain what is being bought and which liabilities transfer. The 7(a) route can cover eligible refinancing and ownership changes, but a program's permitted category does not establish that your transaction meets its specific requirements. Ask the lender to document the structure and exclusions before you commit.

Explore programs by your intended use

This filter shows routes to discuss, not an eligibility decision. Enter the requested loan amount, not projected revenue. It does not evaluate ownership, credit, size, collateral, guarantees, project structure or repayment ability.

Worker in a Kentucky manufacturing facility being adapted for housing production — Manufacturing work photographed in Kentucky in July 2011. The source describes a USDA-supported factory conversion, not an SBA loan. This historical example illustrates facilities and labor in an operating project budget; it is not a current cost or eligibility benchmark. Photo: U.S. Department of Agriculture, Wikimedia Commons; Public domain. Orientation corrected where needed, resized and converted to WebP. This image is not evidence of present eligibility, a loan offer or lender endorsement.

Check current ownership rules early

For covered 7(a) and 504 applications under rules effective March 1, 2026, SBA Notice 5000-876626 requires 100% of direct and indirect owners to be U.S. citizens or U.S. nationals with their principal residence in the U.S., its territories or possessions. The notice also addresses entities, guarantors and transition cases. Have the lender review the complete ownership chain and current rules. Read the official notice.

Do not apply that notice's precise transition rules to every SBA product. SBA separately announced citizenship changes affecting microloans in March 2026; ask the intermediary to confirm its currently applicable requirements. SBA microloan policy announcement.

Build a proposal that can be compared

Itemize the uses. Separate property, equipment, inventory, fees and operating cash; give each its own supporting record.
State the borrower. Match the legal name, ownership records and related entities across the application and agreements.
Identify the financing components. Ask who funds each part, when funds are released and what cash you contribute.
Get all payment phases. Record amortization, maturity, any interest-only period and a balance due at the end.
Price the full transaction. Request current interest, program, lender, third-party and early-payoff charges that actually apply. Do not treat missing quotes as zero fees.

What to ask before choosing a lender or intermediary

Ask which program the institution currently offers, whether it handles your transaction type and what it needs for a complete file. Then request the proposed guarantees, liens and cash contribution in writing. A resource-directory listing does not promise a credit approval or prove that the institution offers every SBA product.

For a CDC project, have the participants explain the complete funding and closing sequence. For a microloan, ask the intermediary about its own underwriting, training and documentation requirements. Do not combine a program's maximum term with an assumed interest rate to manufacture a repayment quote.

Mollohon Row commercial storefronts in Newberry South Carolina — Commercial storefronts at Mollohon Row in Newberry, South Carolina, photographed in November 2023. This illustrates the premises part of a project budget. It does not show a property for sale, establish owner occupancy or verify eligibility for 504 financing. Photo: w_lemay, Wikimedia Commons; CC BY-SA 2.0. Orientation corrected where needed, resized and converted to WebP. This image is not evidence of present eligibility, a loan offer or lender endorsement.

Use official application routes

The 7(a) page provides a route to participating lenders; the 504 page links to CDCs; the microloan page links to approved intermediaries. Verify the destination and use the institution's secure process for financial and identity records.

Common questions

Is an SBA loan a grant?

No. Plan for the contractual repayment obligation. A guarantee protecting part of a lender's risk does not make the borrower's debt disappear.

Can 504 pay for opening inventory?

The reviewed SBA 504 page excludes inventory and working capital. Separate those needs and discuss an appropriate financing route instead.

Does the filter confirm that I qualify?

No. It only compares selected use categories and basic size information. The lender or intermediary must check the actual borrower, program and transaction.

Compare conventional routes in our small-business loan guide or read about business credit lines.

Sources and program pages checked October 29, 2026. Current lender and program documents control. Links are editorial sources; no U.S. credit applications or affiliate application services are provided here.