In this episode, Beau and Carey discuss the similarities and differences between SBA 7a and SBA 504 loan programs for a construction project. It suggests that for smaller deals, it may be better to choose the SBA 7a. The decision depends on the long-term goals of the sponsor, particularly if they plan to sell the building within five years. In such cases, the flexibility and shorter prepayment period of SBA 7a make it more favorable.

The SBA 504 has a 10-year prepayment period for both the bank's first lien and the CDC piece. Some banks may offer a five-year prepayment option, but the CDC's prepayment period is fixed at 10 years. The choice between the loan programs also depends on the size of the loan and the sponsor's outlook for the business and property.

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