Using an SBA 7(a) Loan to Repair Existing Capital

SBA 7(a) loans for capital repairs

Roofs can suffer damage during storms, or wear over time and leak. Equipment will always break down, and most machinery from food service to industrial sectors needs regular maintenance. The repairs required drive up operating costs, which can sometimes drive a business under.

If you’re struggling to find the funding you need to repair your existing capital, an SBA 7(a) loan might be your business’s best option.

Repairing or Improving Capital

To use SBA 7(a) loans to repair existing capital, such use must be for repairs and not for improvement. Here’s a breakdown of each category to help you determine what kind of project you have:

  • Repairing existing capital includes costs used to maintain assets in working order. Some examples include real estate maintenance like roofing, painting, and electrical. Equipment maintenance costs are also considered capital repair.

  • Improving existing capital is going beyond normal maintenance. If an asset is modified beyond its normal working condition, or replaced with something newer or better, these costs are considered capital improvement.

Comparing the SBA 7(a) Loan to the SBA 504 Loan

The SBA 504 loan is a government-guaranteed loan that’s usually used for real estate improvement or remodeling, and for purchasing equipment instead of capital repair. Larger than the SBA 7(a) loan, the SBA 504 loan has a shorter term and different rates.

Borrowers often pair the SBA 504 loan with a loan from a traditional financial institution, which allows for a low 10% down payment. Compared to the SBA 7(a) loan, the SBA 504 loan:

  • is a larger loan, with a minimum of $125,000 and a maximum of $20 million;

  • has a fixed interest rate;

  • has a 20-year maturity rate for real estate and land; and

  • requires a 10% borrower down payment.

Additionally, you must obtain an SBA 504 loan from a Certified Development Company (CDC) rather than from a bank or traditional lending institution.

About the SBA 7(a) Loan

An SBA 7(a) loan might be the source of funding you need to repair your existing capital. Eligibility requirements for the loan program are straightforward, and the loan terms are easy to digest.


To get an SBA 7(a) loan:

  • Your business must operate for profit.

  • It must operate in the U.S. or one of its territories.

  • The business owner must not be on parole.

  • You must have reasonable equity to invest, like a profitable business or your own personal equity.

  • Any alternative financial resources—like a savings account or the ability to get a personal loan—must have been sought and exhausted before you qualify for an SBA 7(a) loan.

Loan Terms

  • Financial institutions will require 10% or more down based on a credit score of 600 or more.

  • The loan term can be no more than 25 years, and the loan amount cannot exceed $5 million.

  • There’s no minimum loan amount, but for a loan of up to $150,000, the government guarantees 85%. Loans of over $150,000 are guaranteed for up to 75%.

Interest rates also depend on the amount of the loan, and are broken into two groups: loans with a maturity of greater than seven years, and loans with a maturity of less than seven years.

  • Maturity greater than seven years; loan amount:

    • Less than $25,000 – 9% interest

    • Between $25,000 and $50,000 – 8% interest

    • Over $50,000 – 7% interest

  • Maturity less than seven years; loan amount:

    • Less than $25,000 – 8.5% interest

    • Between $25,000 and $50,000 – 7.5% interest

    • Over $50,000 – 6.5% interest

Want Personalized Guidance?

At SBA7a.Loans, we live and breathe the SBA 7(a) loan process. We match business owners like you with the best lender for your situation, even if it means that we have to look outside of the SBA 7(a) loan platform. We serve our customers by 1) offering a free educational portal, and 2) leveraging our lender-matching service to help you on your way to success. We have a deep love of American small businesses, and we believe it shows in our customer-first attitude.

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