Calculator
7(a) or 504?
For a property purchase these are genuinely different deals. People pick 7(a) because it is simpler and then pay for that choice for 25 years.
504 needs real estate or heavy equipment to dominate the project.
The fixed CDC portion. Published monthly.
Side by side
same project, two structures| 7(a) | 504 | |
|---|---|---|
| Cash you put in | ||
| Blended rate | ||
| Term | ||
| Monthly payment | ||
| Fees at closing | ||
| Total cost over the term |
What the table cannot show you
504 is two loans. A bank first mortgage plus a CDC debenture, which means two closings and more paperwork. In exchange most of your rate is fixed for 25 years.
7(a) floats. Simpler and usually faster, but your payment moves with prime. Run it two points higher before you decide.
People regularly choose 7(a) because it is easier and then pay for that convenience for twenty-five years. If the project is mostly real estate, at least get a 504 quote.
Common questions
Is a 504 loan safer than a 7(a)?
Counted loan by loan, 504 defaults barely less than 7(a) — 5.0% versus 5.7%. The widely-quoted “half the rate” figure is dollar-weighted, and it is mostly a size effect: within the $350k–$2M range where most 504 deals sit, 504 actually defaults slightly more. See the full analysis.
When should I use 504 instead of 7(a)?
504 is built for owner-occupied real estate and heavy equipment: long term, fixed rate, larger projects. 7(a) is more flexible — working capital, acquisitions, partner buyouts — and faster to close. Many real-estate buyers are only quoted a 7(a); it is worth getting a 504 quote too.
Is a 504 rate fixed?
Yes. The CDC (SBA) portion of a 504 is a long-term fixed rate, unlike most 7(a) loans, which float with prime. That fixed rate is a big part of why 504 borrowers weathered the 2022–24 rate spike better.
Read the guide
Want the rules behind this calculator? SBA 7(a) versus 504 walks through it in plain English — the SBA requirements, the data, and what lenders actually look for.