SBA rules · SOP 50 10 8.1
How long are SBA loan terms?
Allowable loan maturities are determined by the use of proceeds for 7(a) loans (up to 10 years for working capital and equipment, up to 25 years for real estate) and by asset useful life for 504 loans (10, 20, or 25 years for debentures, with corresponding Third Party Loan minimum terms).
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- 7(a) use-of-proceeds limits: Real estate loans may not exceed 25 years (with additional time permitted for construction or renovation), working capital, inventory, and intangible assets may not exceed 10 years, and equipment loans generally should not exceed 10 years but may extend up to 15 years if supported by the IRS asset class useful life.
- 7(a) mixed purpose and acquisitions: Multiple-purpose loans may use a blended maturity, or up to 25 years if 51% or more of proceeds fund real estate; however, change of ownership loans cannot exceed 10 years unless blended with real estate (where only the real estate portion may exceed 10 years up to 25 years) or meeting the 85% real estate special purpose property exception.
- 7(a) revolving and export lines: Working Capital, Contract, and Seasonal CAPLines, as well as SBA Express lines, have a maximum maturity of 10 years; MARC revolving loans have a maximum maturity of 20 years; Export Express lines may not exceed 7 years; and EWCP loans have a maximum maturity of 36 months.
- 504 debenture terms: Debentures must have maturities of 10, 20, or 25 years based on the remaining useful life of the property, with a maximum of 25 years for real estate, a minimum of 10 years for machinery and equipment, and mixed projects based on the asset category constituting the majority of proceeds.
- 504 Third Party Loans: The Third Party Loan must have a term of at least 7 years when the companion 504 debenture is for 10 years, and at least 10 years when the debenture is for 20 or 25 years.
The source
What the SOP says
“Working capital or inventory loans and the financing of intangible assets (including goodwill) must not exceed 10 years.
“Generally, equipment, fixtures, or furniture loans should not exceed 10 years. However, the term may be up to 15 years if the IRS asset class useful life supports the term.
“Real estate loans (including acquisition, rehabilitation, renovation, construction, or improvements to leasehold interests in land) must not exceed 25 years, unless a portion of the loan is used for construction or renovation of the real estate.
“Only the portion of the real estate purchase may have an amortization that exceeds 10-years, up to a maximum of a 25-year term.
“Maturity of the 504 loan is 10, 20, or 25 years based upon the remaining useful life of the property being financed as follows:
“A Third Party Loan must have a term of at least 7 years when the 504 loan is for a term of 10 years and 10 years when the 504 loan is for 20 or 25 years.
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.