SBA and Government Agency Loans

Government agency programs do not lend directly in most cases; they guarantee a portion of a loan made by a participating bank or licensed non-bank lender, which lets that lender accept lower equity and longer terms than its own credit policy would allow. The two dominant programs are SBA 7(a), a flexible working-capital and real estate loan, and SBA 504, a two-part structure pairing a conventional first mortgage with a fixed-rate debenture for owner-occupied property. USDA Business & Industry financing serves the same purpose in rural markets and supports larger project sizes than many borrowers expect.

The economics are compelling for the right borrower: a down payment that can fall well below conventional requirements, amortization that stretches far past a bank's normal schedule, and no balloon on some structures. The cost is process. Eligibility rules govern the size of the business, the use of proceeds and how much of the building the operating company must occupy. Personal guarantees from every meaningful owner are mandatory, and government paperwork adds weeks. Rair Capital pre-screens eligibility before the file goes out so borrowers do not spend two months discovering they never qualified.