02One loan, blended purposes
SBA 7(a) — real estate plus everything else in one note
When the building is one part of a larger request — buying a business that comes with its premises, refinancing an ugly debt stack, funding the fit-out and the first six months of payroll — 7(a) puts the whole thing in a single amortising note.
The capital stack
- Owner injection10%
- SBA 7(a) note90%
Terms
What this programme actually looks like
- Maximum loan
- $5,000,000
- Real-estate term
- Up to 25 years when the proceeds are majority real estate
- Blended term
- Weighted by use of proceeds when real estate is mixed with working capital or equipment
- Rate
- Variable or fixed, priced off a published base rate plus a spread that is capped by SBA rules
- Occupancy test
- Same as 504: 51% of an existing building, 60% on new construction
- Realistic timeline
- 45 to 75 days; a business acquisition with real estate attached runs longer
Illustrative only. Bollard is a fictional business built as a website demonstration — the figures below are worked examples, not an offer, a quote or a rate sheet.
Fit
When it is right, and when it is not
A lender that only publishes the first list is selling. Both lists below are the same length in real life.
The right instrument when
- You are buying a business and its building in one transaction.
- The request mixes property with working capital, equipment or a partner buy-out.
- The property alone would not support the loan, but the operating cash flow comfortably does.
- You want one payment and one lender rather than a two-loan structure.
The wrong instrument when
- The deal is purely real estate and the business is strong. A 504 usually prices better over twenty-five years and leaves the bank first conventional.
- You need more than five million dollars of leverage. That is the programme ceiling, and stacking around it invites trouble.
- You are an investor. Owner-occupancy is a programme requirement, not a preference.
Underwriting
What gets looked at, in what order
- 01
Global cash flow
The operating company, the real-estate holding entity and the guarantors are all viewed together. A strong building does not rescue thin coverage.
- 02
Use of proceeds
Every dollar is tagged to a purpose, and the term is set by the weighted mix. That is why a fit-out budget written properly is worth years of amortisation.
- 03
Collateral, but not only collateral
A 7(a) can be approved when collateral falls short — what it cannot survive is coverage that falls short.
Worked example
Worked example — dental practice acquisition with its building
- Practice purchase
- $1,150,000
- Building purchase
- $980,000
- Equipment and fit-out
- $180,000
- Working capital
- $90,000
- Total request
- $2,400,000
- Owner injection (10%)
- $240,000
A worked example. Injection requirements vary with the transaction; a change of ownership is underwritten differently from an expansion.
Questions
What people ask about this programme
Is 7(a) more expensive than 504?
Usually, on the real-estate portion, and the trade is flexibility. A blended request that 504 cannot legally cover is worth paying for; a clean building purchase generally is not.
Does the whole loan get twenty-five years?
Only if the proceeds are majority real estate. Mixed uses produce a weighted term, which is why the budget you submit shapes the payment as much as the rate does.
Next bay
Tell us about the building
A twenty-minute conversation is usually enough to know whether a deal works, which programme fits, and what your equity actually supports.
Or call the desk
(816) 555-0142Monday to Friday, 8am – 6pm Central
A demonstration number in the range reserved for fiction. It does not ring anywhere.