Businesses Can Combine 7(a) and 504 Loans for $10 Million in SBA-Backed Financing

The Small Business Administration (SBA) has announced a policy, effective since July 4, that allows businesses to combine 7(a) and 504 loans to secure up to $10 million in funding.The 7(a) loan program provides financial assistance of up to $5 million to help small businesses acquire real estate, finance equipment purchases, access working capital, and expand operations. The 504 loan program provides long-term, fixed-rate financing to acquire major fixed assets that promote business growth and create jobs, with a maximum funding of $5.5 million. A borrower could previously only take $5 million cumulatively from both programs. However, the new rule doubles this combined loan limit to $10 million, the SBA said in a July 7 statement.The update raises the maximum financing offered by the SBA to “the highest level” in agency history. The higher combined limit is applicable to borrowers who first secure a 7(a) loan, which can allow them to get additional funds through the 504 program, the agency said.The decoupling of 7(a) loan balance from the 504 program allows capital-intensive businesses “greater flexibility” when it comes to combining long-term financing, for things such as equipment and real estate, with working capital required to support ongoing operations and business expansion.The agency had initially announced the rule on May 18 and has now brought it into effect in less than two months.SBA Administrator Kelly Loeffler said in a statement that business formations are surging and manufacturing is coming back to the country under the Trump administration, due to which small businesses now require more capital for various needs, such as hiring people, meeting higher demand, or expanding operations.According to a June 10 statement from the Census Bureau, 523,971 applications to open a business were submitted in May, up by 3.7 percent from the previous month.The average number of monthly business formation applications has remained above 500,000 for the first five months of 2026, higher than the roughly 436,000 average during the same period in 2024 under the previous administration, according to Census Bureau data.“SBA’s loan limits have not been raised for more than a decade, creating a gap in funding for small businesses that are growing. By doubling the cumulative 7(a) and 504 loan limit to $10 million, the Trump SBA is unlocking the largest financing opportunity in agency history and giving job creators the flexibility they need to grow,” Loeffler said.“In a booming manufacturing economy, that means more investment in American communities, more jobs for American workers, and more momentum for our Made in America comeback.”SBA’s expansion of funding access comes amid reduced optimism among small businesses.Last month, the National Federation of Independent Business published a report showing that its Small Business Optimism Index had declined in May from April. The report is based on a survey conducted among its members.“Uncertainty is the enemy of growth and investment, and it is high,” the report said. “Much is related to the Iran War and its impact on the global oil supply and other commodities, the sooner it’s resolved, the quicker some ‘normality’ will be restored.”After a preliminary ceasefire agreement in late June that had calmed the oil markets, prices have been surging this month due to renewed tensions, with President Donald Trump saying on Wednesday that the ceasefire was effectively over, after the Iranian regime attacked commercial vessels in the Strait of Hormuz.Despite these challenges, U.S. business sectors are registering growth, according to a July 6 statement from S&P Global.All seven business sectors tracked by the company—basic materials, consumer goods, healthcare, industrials, technology, financials, and consumer services—were found to have registered an expansion in business activity in June compared to May. This is the “highest number” of sectors recording expansion since November last year.“Basic Materials saw the strongest rate of output expansion in June,” S&P Global said. Production has increased every single month since March, with the latest uptick being the steepest one in over four years.Consumer goods, the second strongest performing sector in June, saw output increase at a “robust pace,” the company said.