Guide
SBA Loans Explained: 7(a), 504, and Microloans Compared
SBA capital is the cheapest money a small business can get and the slowest. A plain-language comparison of the three programs and when each is worth the wait.
May 19, 2026 · 8 min read
The 7(a) program is the general-purpose workhorse
The 7(a) is the SBA's flagship: up to $5 million, usable for working capital, equipment, refinancing, and acquisitions. The government guarantees a portion of the loan, which is what allows a bank to say yes to a borrower it would otherwise decline.
The trade-off is process. Expect personal guarantees, collateral review where available, full financial packages, and a typical timeline of 45 to 90 days from application to funding.
504 is for real estate and heavy equipment
A 504 loan pairs a bank loan with a Certified Development Company debenture to finance owner-occupied real estate or long-life equipment, usually with 10 percent down. Rates are fixed and long, which makes it excellent for buying the building you already lease.
It is not a working capital tool. You cannot use 504 proceeds for payroll, inventory, or marketing.
Microloans and the honest timing question
SBA microloans run up to $50,000 through nonprofit intermediaries, often with technical assistance attached. They are a good fit for early-stage or underbanked businesses that need a modest amount and can wait.
The real question is never 'is SBA cheaper' — it always is. The question is whether the opportunity in front of you survives ninety days. When it does, apply for SBA. When it does not, bridge with revenue-based capital and refinance into SBA later.
FAQ
Questions worth answering.
Can I hold an SBA loan and a merchant cash advance at the same time?
Sometimes, but many SBA lenders treat an open advance as disqualifying. If SBA is your goal, resolve short-term positions first.