Exceptions to SBA Loans: How To Get a 25 year Loan

The exceptions to the standard vanilla SBA loan are numerous. In these articles I try to educate the reader on other ways and SBA loan can be achieved. 

Under the SBA program there are two type of loans.  The 7(a) program is the most common. Interest rates are typically 2 to 2.5% above prime rate and are amortized over 10 years.  These are used to purchase business assets. 

The 504 loan is used to by real estate.  This loan is usually amortized of 25 years with an interest rate that is about 1.5% over prime. 

Here is the trick to help you reduce your monthly interest and principal payment if that's what you'd like to do.  If you're buying a business and the real estate is included in the purchase, then if the loan amount for the real estate is greater than the loan amount for the business, then is is highly possible to have the entire loan for both business and real estate to be wrapped into the 504 loan.  This means the monthly payment will be significantly lower.  Of course, you'll be paying over 25 years rather than 10 years. 

A good SBA lender can help you navigate these tricky waters. Please call me at 800.576. 3615 if you need help or have questions. 

Mel Jones is one of the premier restaurant brokers in the nation having published hundreds of articles on buying and selling a restaurant and bar business, selling thousands of restaurants in CA., WA and AZ and building one of the most copied business models in the brokerage industry.  Mel started SellingRestaurants in 2004 with the one simple concept, give the buyers the information they need to make intelligent buying decisions without being pestered by a broker or hiding information, prepare the business for market by researching key details that make or break deals and educate the buyer on the buying process to create an intelligent buyer.  Prior to SellingRestaurants, Mel was a Chief Financial Officer for Universal Music Group, the largest music company in the world.  There he participated in more than $11.5 billion of merger and acquisition transactions.  He also work for top companies such as Nestle Foods, USA. He hold a Bachelors in Business Administration Finance as well as attened Law School at Gonzaga University.  Give Mel a call at 480.274.7000 or e-mail him at [email protected] if you have any questions.