The SBA announced a significant update effective July 4: eligible borrowers can now access up to $10 million in total SBA financing by using both programs—up to $5 million in 7(a) and an additional $5 million in 504 financing.
Why this matters
Previously, the SBA capped the combined total exposure at $5 million across both programs for a borrower and its affiliates. This sometimes forced lenders and borrowers to choose between funding fixed assets or securing operating capital—limiting flexibility, particularly for growing or capital-intensive businesses.
This change removes that constraint, provided the 7(a) loan is approved first.
What this means for your borrowers
- Greater flexibility to fund real estate and equipment (504) alongside working capital, inventory or business acquisition (7(a))
- Ability to support larger, more complex expansion projects.
Example:
A growing wholesaler plans to expand operations by purchasing a new facility and upgrading equipment, while also needing additional working capital to ramp up production and hire staff.
- Before: The borrower was limited to $5 million total SBA exposure, sometimes forcing tradeoffs between facility financing and operating liquidity.
- Now:
- $5 million 504 loan to purchase and improve the facility and equipment
- $5 million 7(a) loan for working capital, inventory and hiring.
This structure allows the business to fully execute its growth plan without compromising cash flow.
Also of note:
- The SBA 7(a) must be processed and approved first.
- 7(a) loans will not count against 504 loan availability.
- 504 loans DO count against 7(a) availability.
As borrowers pursue more sophisticated growth strategies, WBD has a seasoned and knowledge team of loan officers and lender services managers ready to help your institution structure transactions that take full advantage of this added flexibility.
Read the SBA's news release here: SBA Doubles Cumulative 7(a) & 504 Loan Limit to $10 Million
