The short answer is yes, you can get both an SBA 504 loan and an SBA 7a loan at the same time.

There are several good reasons why a business owner should think about getting an SBA 504 loan.

An SBA 504 loan is a tool that business owners can use to finance their expansion or modernization. It's an alternative to traditional bank financing and can be used for a variety of needs, including real estate, building, equipment, and more. With an SBA 504 loan, you'll be able to get roughly 90 percent of your entire project funded while having to “inject“ only about 10 percent. You‘ll get two loans: One from the Bank for 50 percent and the SBA-guaranteed CDC portion of about 40 percent.

Compared to other business loans, they have cheaper interest rates. Up to $5 million (or $5.5 million for small firms) is available. They also have easier requirements to fulfill for borrowers.

There are, however, issues with this. For instance, a 504 loan's rigidity—it can only be used for expansion-related activities like purchasing real estate, erecting structures, or investing in heavy machinery and such items—may be the biggest drawback. This loan's proceeds cannot be utilized for many other purposes, including as working capital. The SBA 7(a) loan can be used in this situation. The Small Business Administration's most widely used business loan can be used for everything from buying inventory to paying off other obligations to investing in commercial real estate.

But is it possible to use both? Can you have the best of both worlds?

Multiple SBA loans may be feasible, but they will not be simple to obtain. Even if the SBA decided to approve it (and there is actually no law prohibiting it), you must make sure that you have a strong credit history, that your company complies with the industry and size restrictions for that loan, and that you have enough collateral to back both loans.

Typically, the SBA won't provide a single borrower more than one loan at a time. Furthermore, it makes sense to just take out one loan at a time. You build stability and a credit history by taking out a loan and then repaying it. You demonstrate that your company is less risky than others, which makes lenders more receptive to working with you.

To combine the two loans, you can always speak with a commercial loan adviser. Make sure you have enough collateral or that the SBA will permit you to utilize the same collateral to secure two loans, whichever is the case (this is rare, but not completely unheard of). If you choose to combine the loans, there are a few different loan structures that apply.

We're here to assist you in obtaining the necessary commercial financing. For a risk-free consultation and a free SBA loan estimate, just contact us today!