top of page

What Are Loan Options for Construction Owners If PPP Funding Runs Out?

Updated: May 6

Over the last year, the Paycheck Protection Program (PPP) has assisted numerous company owners, including general contractors, subcontractors, and small contractors, in keeping their operations running during the pandemic. However, PPP funding is just a short-term solution to the problems that many small companies are facing. Fortunately, there are other SBA programs available to both construction owners and their clients. SBA loans are available to construction industry members, but they can also be used by companies financing construction and capital expenditures, such as medical practices, professional firms, suppliers, and hotel and healthcare facility operators.

1. 7(A) LOANS

The SBA's most famous loan is the 7(a) loan, which can be used for short- and long-term working capital, refinancing existing company loans, buying real estate, and purchasing furniture, fixtures, and materials. The eligibility of a company for a 7(a) loan is determined by its position, services or goods offered to generate revenue and credit history. If a company works for profit, is classified as a small business in the United States, has invested equity, and may justify the need for a loan for good business practices, it is qualified.

 PPP Funding

The maximum loan amount on a 7(a) loan is $5 million, but the interest rate is flexible and tied to the prime rate. This loan requires collateral, up to 90% of the loan amount, which is deducted over 25 years.

2. 504 LOANS

Another ideal solution for small contractors or self-employed jobs is a 504 loan. A significant advantage of a 504 loan is that the fees are much lower than those of a 7(a) loan. This commercial real estate program provides long-term, fixed-rate funding of up to $15 million ($5 million in SBA loan dollars plus a $10 million bank loan) for large fixed assets that support economic development and job creation.

Funds may be used to buy a home, finance ground-up renovation or building improvements, or purchase heavy machinery and equipment. This commercial real estate program provides long-term, fixed-rate financing of up to $15 million ($5 million in SBA loan funding + $10 million bank loan) for substantial fixed assets that encourage business growth and job creation. It is specially designed for funds to be used to lease a building, finance ground-up construction or building repairs, or purchase heavy machinery and equipment.

Businesses that operate as a for-profit firm in the United States, have a tangible net value of less than $15 million, and have an average net income of less than $5 million after federal income taxes for the two years before your application are eligible borrowers. Businesses must also fit under the SBA's size requirements and have a sustainable business strategy.

 Contractor Invoice: What makes a Construction Invoice?


The program is intended for investor homes and requires only a 10% down payment from the small company owner, with funding ranging from $125,000 to $20 million. The interest rate on a 504 loan is stable, no outside collateral is required, and the loan is repaid over 20 or 25 years.


It is critical for company owners to consult with a trustworthy advisor and ask any questions they may have before applying for loans. The SBA offers a number of services and financial support to businesses when deciding on the ideal loan for them.


Are you ready to get help, or are you still not sure if you need help to run your construction business? Contact Construction Cost Accounting to have a free 15-minute consultation!


38 views0 comments


bottom of page