Home / Commercial lending / SBA loans
Government-backed, not government-lent.
SBA 7(a) and 504 for Indiana businesses. Longer terms and less money down than conventional commercial debt, in exchange for more paperwork and more patience.
What the SBA actually does.
The Small Business Administration does not lend you the money. It guarantees part of a loan made by a lender, which lowers that lender’s risk and lets them say yes to a file they would otherwise decline, on terms they would otherwise not offer. You borrow from the lender. The SBA stands behind part of it.
That is the whole trade. The guarantee is why the term is longer and the down payment smaller. The paperwork behind the guarantee is why it takes longer to close.
There is a rule people find odd, and it is worth knowing before you apply.
SBA lending is for businesses that cannot get the same credit on reasonable terms elsewhere. If a conventional loan would do the job at a sensible rate, that is the loan you should take, and we will tell you so. SBA is the route when conventional is not there or the terms do not work.
The two programs.
Almost everything runs through one of these. Which one depends on what the money buys.
7(a) — the general one
The SBA’s main program, and the flexible one. Working capital, buying a business or a partner out, equipment and machinery, furniture and fixtures, refinancing existing business debt, and real estate. Up to $5 million. If your need does not obviously belong somewhere else, it usually belongs here. We place 7(a).
504 — the building and heavy equipment one
Built specifically for owner-occupied commercial property and long-lived fixed assets. It is structured differently: a conventional loan from a lender, a debenture through a Certified Development Company, and a contribution from you, which is normally a good deal smaller than a conventional commercial down payment. Up to $5 million on the SBA portion. We place 504 through Indiana Statewide Certified Development Corporation.
Can you use both programs, and is there a ceiling?
Since July 4, 2026 a 7(a) balance no longer reduces what is available under 504. The per-loan maximums did not rise; the two programs simply stopped counting against each other, so a borrower can hold up to $5 million under each rather than $5 million between them. There is no rule about which has to come first.
The limit that actually binds on a large deal is a different one. SBA’s guaranty to any one business, including affiliates, cannot exceed $3,750,000, and the approved amount of any revolving line counts toward it. On a $5 million loan at a 75% guaranty, that cap is already reached. It did not change on October 1.
Figures are the SBA’s published maximums, not an offer, and not what any particular business will qualify for. SBA 7(a) program details.
What changed on October 1, 2026.
SBA replaced its rulebook, SOP 50 10, with version 8.1. The changes below are the ones a borrower feels. They apply to loans issued an SBA loan number on or after October 1, which is not the same as the date you apply.
We have written these up in more detail, with the numbers behind each one:
The rule that decides the most files now is about who owns the business.
No SBA loan may be made if any direct or indirect owner, or any guarantor SBA requires, is what the rulebook calls an Ineligible Person. That category is wider than most of the coverage suggests, and it is worth reading properly before assuming it does or does not reach you.
Who counts as an Ineligible Person.
SBA’s own list. It is not limited to these, and it reaches through entities to indirect owners.
- Anyone who is not a U.S. Citizen or U.S. National
- Lawful permanent residents — green card holders — including both unconditional and conditional status
- People granted asylum, refugees, visa holders, non-immigrant aliens, and people under DACA
- Anyone, including U.S. citizens, whose principal residence is outside the United States, its territories or possessions
- Any business or entity created, organized or incorporated outside the United States, anywhere in the ownership chain
- Citizens of the People’s Republic of China or of Hong Kong
- Anyone on the OFAC sanctions list
- Undocumented immigrants, who also may not be an officer, director or employee of the business
If this reaches you: the one cure, and what is still open
There is one cure, and it has a lookback. The business becomes eligible only if the Ineligible Person completely divests their ownership before the SBA loan number is issued. SBA then looks back six months from that date: an ownership change made inside that window to clear the rule does not clear it.
If this rules you out, it rules you out of SBA, not out of borrowing. Conventional commercial lending is unaffected. So is equipment finance. And USDA’s Business and Industry program, which is also a federal guarantee, still accepts lawfully admitted permanent residents, so for a green card holder whose project sits in an eligible rural area that route is open where this one has closed. Worth a conversation before you assume there is nothing available.
If you are buying a business.
Change-of-ownership rules were rewritten and moved into their own appendix. Deals are now sorted into four types, and the type your deal lands in decides two numbers: how much you have to put in, and how much coverage the business has to show. There is also a new Quality of Earnings requirement above a certain purchase price, and a hard limit on how long the seller is allowed to stay on.
Which of the four categories your deal lands in by default, and what each one costs you, is worth knowing before you sign anything. We wrote it up with the numbers: buying a business with an SBA loan.
Do you qualify.
The SBA sets the floor. Individual lenders then add their own requirements on top, which is where most of the real variation lives.
- An operating, for-profit business, based in the United States
- No direct or indirect owner, and no required guarantor, is an Ineligible Person. See above
- Within the SBA size standard for your industry
- Unable to get the same credit on reasonable terms from a non-government source
- Able to show the business can repay it
- Not one of the business types the SBA lists as ineligible
- Our SBA lenders look for a credit score of 660 or better and three years of financials. They add no industry restrictions of their own beyond SBA’s eligibility rules
How a 504 is put together.
A 504 is not one loan. It is three parties funding the same project at the same time, which is the part that confuses people and also the reason your down payment is smaller than it would be on a conventional commercial loan.
The lender
50% or more of the project, as a first mortgage. This is a conventional commercial loan on conventional terms.
The CDC
Up to 40%, as a 504 debenture in second position, guaranteed in full by SBA. We work with Indiana Statewide Certified Development Corporation, one of five CDCs certified to issue 504 loans in this state.
You
At least 10%. It can be borrowed, as long as that borrowing sits behind both the lender and the debenture.
Two things move your share up, and they are worth knowing before you make an offer, because they change the cash you need at closing.
15% down
If the building is limited or special purpose — a gas station, a car wash, a hotel, a restaurant with a heavy build-out — or the business is brand new. The debenture then covers no more than 35%.
20% down
If it is both a special purpose building and a brand new business. The debenture then covers no more than 30%. This is the combination that catches people out: a first-time owner buying a car wash is both.
SBA counts a business as new if it has been generating revenue for a year or less. Percentages are the program minimums; your lender may ask for more, and the exact structure depends on the project and the appraisal.
What to have ready.
SBA files ask for more than conventional ones, and they ask early. Getting this together before you apply is most of the difference between a slow close and a very slow one.
The full document list
- Business tax returns for the last three years, all pages
- Personal tax returns for the last three years, for each owner, all pages
- Business bank statements for the last three to six months
- Year-to-date profit and loss, and a balance sheet
- A current debt schedule
- A personal financial statement for each owner
- Valid photo identification for each owner
- Business and entity formation documents
- For an acquisition: the purchase agreement and the letter of intent, if applicable
- For property: the purchase agreement, and an appraisal once ordered
- For equipment: the quote, invoice or specification sheet
If SBA is not the answer.
Business loans
Lines of credit, acquisitions and working capital on conventional terms. Faster, and often the right call.
Commercial loans
Conventional commercial real estate and construction lending, where the building is the security.
USDA business loans
A different federal guarantee, up to forty years, if the project sits in a rural area.
Equipment loans
Secured by the machine itself. Usually quicker to close than anything with a guarantee attached.