How long can an SBA 7(a) real estate loan run?
Short answer
Up to 25 years, plus any reasonable construction or renovation period. That limit covers buying, rehabilitating, renovating, constructing or improving real estate, under SOP 50 10 8.1, Appendix 17, Para. A.3 and 13 CFR § 120.212(c).
SOP 50 10 8.1, Appendix 17, Para. A.3 (p. 390) caps real estate loans at 25 years. It covers acquisition, rehabilitation, renovation, construction and improvements to leasehold interests in land.
Construction time
If the proceeds include construction or renovation, a reasonably necessary construction period may be added to the 25 years. 13 CFR § 120.212(c) says the 25-year maximum includes extensions.
Prepayment
A real estate loan of 15 years or more falls under the Subsidy Recoupment Fee. It applies if you prepay more than 25% in one of the first three 12-month periods (13 CFR § 120.223).
Amortization
SBA does not allow balloon payments. The loan must pay off by maturity (Appendix 18, AmortizationPaying a loan down on a schedule, so each payment covers interest and part of the balance. Full definition).
Limits that change the answer
- Farm land and structures at 51% or more of proceeds: 20 years (Para. A.7).
- A business purchase with real estate follows Appendix 15, where only the real estate portion can run past 10 years.
- Improvements to rented space, apart from ground leases, follow the leasehold rule: 10 years, plus up to 12 months to complete the improvements.
SBA Express can finance real estate under the same maximum, but lenders set their own terms. Occupancy rules in Section A, Chapter 3, Para. C also apply.
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