Financing
SBA 7(a) & SBA 504 Loans
Government-backed loans for owners who run their own business or hotel, with as little as 10% down.
A bank makes the loan and the U.S. Small Business Administration guarantees part of it, so lenders accept less down and longer terms. 7(a) is the all-purpose program; 504 is for buildings and long-life equipment.
A good fit when
- You will run the hotel or business yourself
- You want the smallest down payment
- You are buying a business, including its goodwill
Quick facts
| Loan size | 7(a) up to $5 million; 504 CDC portion up to $5 million (more for manufacturers), larger total projects |
|---|---|
| Down payment | At least 10%; hotels and other special-purpose buildings 15% on 504 (20% for a new hotel); many hotel lenders ask for 15 to 20% |
| Term | Up to 25 years for real estate, 10 years for business assets |
| Rate | 7(a) over $350,000: usually prime + 1.50% to 2.75%; hotels often prime + 1.00% to 1.50% (cap: prime + 3%). 504: 6.97% fixed for 25 years on the SBA part (Oct 2026) |
| Personal guarantee | Yes, from every owner of 20% or more |
| Time to close | 60 to 90 days |
Typical ranges as of October 2026. Every lender and deal is different.
Watch out for
- Since March 1, 2026, every owner must be a U.S. citizen or national living in the U.S. (green card and visa holders are no longer eligible)
- More paperwork than a bank loan, and an SBA guaranty fee (about 2 to 3.75% of the guaranteed part)
- A seller note counts toward your down payment only if it is on full standby
7(a) or 504? 7(a) can pay for almost anything: the business, goodwill, real estate, equipment and working capital. 504 is only for owner-occupied buildings (hotels included) and long-life equipment, but gives a long fixed rate on the larger part. Rules follow SBA SOP 50 10 8.1 (effective October 1, 2026). Any compensation we receive on an SBA loan is paid by the lender and disclosed on SBA Form 159.
General information, not an offer or commitment. Star Advantage Funding is not a lender; every lender sets its own terms.