business acquisition financing

🔎 At a Glance: What SBA Borrowers Need to Know

• ✅ SBA loans of more than $10 million are already possible — even without the new law – using the SBA 504 and/or creative 7a lending – and you don’t have to be a manufacturer.

• 🚀 The Made in America Manufacturing Finance Act, passed by the House in Dec 2025, could make $10 million the new normal for qualifying small U.S. manufacturers under both 7a and 504…BUT…$10M should be thought of as both a current and future baseline for reasons explained in this post.

• 🧱 504 loans already support projects over $20 million for commercial real estate and/or equipment-heavy businesses, but if the law passses, this could get bumped up to approx $40,000,000.

• 🔁 Some lenders currently fund up to $7 to $9M just using creative SBA 7a loan structures.

• 💡 You don’t have to wait for the bill to become law — borrowers in many industries (not just manufacturers) can access larger loans today.

• 🔓 US Manufacturers can currently finance multiple projects/locations in the $15 to $25 million range using the 504 program.    

New $10 Million SBA Loan Limits for Small Manufacturers: What the Made in America Manufacturing Finance Act Could Mean

The Made in America Manufacturing Finance Act of 2025 is a bipartisan bill designed to boost U.S. small manufacturers by expanding their access to affordable capital.

In early December 2025, the U.S. House of Representatives unanimously passed this act (H.R. 3174), which would increase the maximum SBA loan for small manufacturers (for 7a loans) from $5 million to $10 million and for 504 loans to $10 million: smallbusiness.house.gov.

Keep in mind, that the SBA 504 loan is actually a 2^nd mortgage or loan that accounts for just 30 to 40% of the total financing that is possible when using the “SBA 504 Program.” This is important to understand, especially for small or mid-sized manufacturing businesses, because this new higher loan limit could allow “SBA 504 loans” of up to and over $30 million, which would make it possible to finance projects in the $30,000,000 to $40,000,000 range or even higher for stronger borrowers.

This is because the new higher SBA loan limit would allow lenders to offer 504 “first” mortgages or loans of between $15M and $25M at 50% – 60% loan to value/loan to cost.

The bill has advanced to the Senate for further consideration. If enacted, the new higher loan limits would become available for both SBA 7a loans as well as for the 504 loan program for eligible manufacturers.

It should be noted that SBA 504 projects in the $20M to $25M range are currently possible for ALL types of businesses – not just manufacturers – and some SBA 7a lenders will routinely lend between $7M and $9M for stronger borrowers in many industries in spite of the 7a’s current “maximum” of $5 million.

Manufacturers Can Finance Multiple Projects with SBA 504 Now

Additionally, manufacturers have the added benefit of being able to access additional funding on a per project basis right now.  This is due to the current SBA rule that allows manufacturers to have multiple $5.5 million 504 seconds as long as each is to finance a different project.

In real terms, this means is a US manufacturer can have multiple 504 loans at one time and each 2nd loan or mortgage could be up to $5.5 million, which means a manufacturer could currently have multiple projects of $16+ million financed with 90% leverage through the SBA 504 loan program.

Example Using Approx Dollar Amounts:

Total Project Costs: $16,200,000

Down payment/Equity (10%): $1,620,000

First Mortgage: $9,000,000

SBA 2nd Mortgage: $5,500,000

I have used a roughly 55% ltv first mortgage since that is not uncommon for stronger transactions. (The SBA does not limit the LTV for first for the first mortgage, but it usually between 50% and 60%). Also, larger loan amounts are possible with more equity/larger down payments.

Doubling SBA Loan Limits for Manufacturers – What Changes?

Under the current rules, the typical maximum SBA loan amount (whether 7a first loan or 504 second) is $5 to $5.5 million.* This cap has often constrained small manufacturers whose expansion projects or equipment needs often exceed the SBA loan limits. The Made in America Manufacturing Finance Act directly addresses this gap by doubling the maximum loan specifically for small manufacturing businesses. In practical terms, this means:

SBA 7a Loans: Qualifying manufacturers could secure up to $10 million (or more) in SBA-guaranteed 7a financing, versus the prior $5 million limit.*

The 7a program is versatile – it can fund all of the following:

• land/real estate purchase
• construction (especially ground-up projects and “projections-based” ground up construction)
• business acquisitions
• business expansions
• equipment purchases
• vehicles
• working capital
• inventory
• other small business needs.

With a loan higher cap, manufacturers can finance larger initiatives – for example, purchasing land and constructing a new manufacturing facility, launching a new product line or acquiring a competitor** and/or the competitor’s entire production facility – ALL under one loan. This fills a critical financing gap for loans in the $5–10 million range that are often hard to obtain from banks without an SBA guarantee.

* FYI: The way some SBA lenders currently offer more than $5 million in SBA 7a financing is by adding a 2^nd loan (that is not guaranteed by the SBA) behind a guaranteed $5 million SBA 7a. Typically, these second loans are from $1 to $4 million depending on the lender and the strengths of the transaction. If the Made in America Manufacturing Finance Act is passed then small manufacturers would have access to up to at least $10 million of SBA 7a financing or possibly more IF the lenders who are currently willing to tack on a 2^nd loan continue to do so behind the new larger loan amounts.

**Also, the SBA 7a has more than a few remarkable features if used to its full capabilities by a lender. One of these features allows you to purchase another business in the same industry (same NAICS code) with NO down payment. So, if this new higher loan limit becomes a reality, then small manufacturers would have even more capacity/SBA eligibility to grow by acquisition(s) or opening new locations/facilities. This could be especially helpful for those who are currently out of SBA eligibility due to having $5 million in currently outstanding 504 or 7a loans.  

SBA 504 Loans: The 504 program, is a 2-loan structure consisting of a conventional first mortgage or loan and an SBA guaranteed 2^nd mortgage or loan. The program is typically used for major fixed assets like real estate and heavy equipment, and if this bill passes, it would likewise see its SBA guaranteed 2^nd loan limit raised to $10 million for eligible manufacturers. Previously, 504 loans for manufacturers had a cap of $5–5.5 million for the SBA-backed portion. With the higher limit, a manufacturer could finance projects on a much larger scale – such as constructing a new plant or purchasing and installing costly high-tech machinery – using the 504’s low-down-payment/high leverage, “mostly fixed-rate” financing.

A dramatic increase in the loan limit, would show that the SBA recognizes that the cost of competing in modern manufacturing – from advanced machinery to expanded production space – often exceeds the current SBA max loan amounts, and it gives SBA lenders the ability to meet the capital needs of more manufacturers.

What about NON-manufacturers?

As mentioned above, if your transaction is strong enough, the lenders that offer the 2-loan 7a structure with the unguaranteed 2^nd loan, are already a solution for loans in the $6 to $9+ million range. So, even though you would not be able to borrow the full $10 million that may soon become possible for manufacturers, you can get somewhat close (and this is possible now).

And, if you are not a manufacturer, but you have a real estate or machinery/equipment transaction then the 504 program might currently be a good fit for projects between $10 and $20 million.

You can also “piggyback” a 7a behind a 504 for additional funds for the following:

• working capital

• inventory

• soft costs / start-up liquidity / moving costs for the business or heavy equipment

• debt refi (if eligible)

• sometimes FF&E if not covered elsewhere

The key when doing so, is that you currently cannot go over $5 million in combined SBA-guaranteed debt, but keep in mind that for 504 transactions, only the 504 second is actually guaranteed by the SBA, so practically speaking – whether you are a manufacturer or not – the following example is possible today:

Hypothetical Manufacturing Business Moving to a New Location:

504 first loan or mortgage:

504 2nd loan or mortgage: $5 million

7a loan for additional uses as mentioned above: $500,000

I don’t think many business owners know the true value of these programs unless they have a real need and find a saavy lender who has been there/done that, because the level of creativity that is possible is unlike anything that I know of on the conventional/traditional bank loan side.

Who Qualifies as a “Small Manufacturer”?

Truly large businesses cannot tap these higher loan limits as the Act targets small U.S.-based manufacturers, but the definition of “small” is actually quite large and often means “Mid-Sized.” The criteria for eligibility include:

• Industry Classification: To be considered “small,” the business must fall under manufacturing NAICS codes 31, 32, or 33 (covering a broad range of manufacturing industries, from food processing to fabricated metal to machinery and high-tech manufacturing). In other words, it needs to be a bona fide manufacturer producing goods.
• Small Business Size: It must meet SBA’s small business size standards for its industry. Manufacturing firms are generally considered “small” if they have 500 or fewer employees, although for certain manufacturing categories the threshold is higher (up to 1,500 employees for sectors like aircraft or semiconductor manufacturers). In practice, about 98% of all U.S. manufacturing firms are small businesses under SBA’s definition. This means virtually all but the very largest manufacturers would qualify.
• U.S. Production Requirement: A unique condition in the Act is that it only extends the $10 million cap to manufacturers with production entirely located in the United States. If a company’s manufacturing operations rely even in part on facilities abroad, it would not qualify for the increased SBA loan size. This “Made in America” requirement is intended to reward firms that produce domestically and encourage others to onshore their production. Essentially, to access the larger loans, a manufacturer must be truly “Made in America” in its operations.

In short, any U.S. manufacturer that qualifies as a small business and produces exclusively in America could be eligible for these new higher loan amounts and much higher total project costs. This spans a wide spectrum – from family-owned businesses/factories with a relatively small number of employees, up to mid-sized manufacturing plants with several hundred workers.

Manufacturing businesses that could benefit from the new higher loan limits range from metal fabrication shops and food product makers, to furniture, textiles, electronics assemblers, machinery producers, and more.

All these businesses stand to gain new financing options if the act becomes law.

Key Benefits of Raising the SBA Loan Cap

1. Financing Larger Investments in Equipment and Facilities: Manufacturing is a capital-intensive sector. By raising the SBA loan ceiling to $10 million, the Act would enable small manufacturers to finance major investments that were previously out of reach.

For example, a company could use a 7a or 504 to buy expensive machinery or to automate production lines, to expand or modernize its factory, or even construct a new facility, all in a single loan package. With the current $5 million cap, many of these projects would have been only partially funded (or not funded at all). Now, manufacturers can undertake transformative upgrades – such as installing cutting-edge robotics, adding new product lines, or expanding production capacity – with the help of government-backed financing.

The Act “aims to unlock more capital” for exactly these purposes: buying machinery, upgrading equipment, expanding factories, and scaling up production.

1. Supporting Growth and Competitiveness: The higher loan limit directly addresses the reality that the cost of competing in manufacturing has risen – whether due to advanced technology, larger space requirements, or supply chain shifts. Lawmakers have acknowledged that the previous $5 million cap for both programs is outdated in today’s industrial landscape. By doubling the cap, the Act gives entrepreneurs the financial room to scale up operations and take on bigger contracts without being handcuffed by financing. Small manufacturers will be better equipped to fulfill large orders, enter new markets, or ramp up production for critical supply chains knowing they can access up to $10 million in affordable capital with the 7a program (again, even before considering that some lenders might be willing to piggyback a 2^nd unguaranteed loan behind it) and significantly more money with the 504 – effectively leveling the playing field for smaller manufacturers and enabling them to better compete with larger companies or importers.
2. Encouraging Domestic Production and Reshoring: Because the $10 million loans are reserved for companies manufacturing entirely in the U.S., the Act creates a powerful incentive for local production. It is intended to be a reward of sorts for those who have kept operations onshore and the hope is that it will encourage others to bring production back to America (reshoring) in order to access more or larger SBA loans. It could have strategic economic benefits: it could strengthen domestic supply chains, create more U.S. manufacturing jobs, and reduce reliance on imports. The Act is part of a broader “Made in America” initiative across the SBA and other agencies – including efforts to cut red tape for manufacturers and connect them with domestic suppliers. By expanding credit to U.S.-based manufacturers, the Act supports the Federal government’s current goals of rebuilding industrial capacity at home. Communities could see more factories expanding locally instead of overseas, along with the jobs and economic activity that come with that growth.
3. Lower Cost of Capital (Fee Reductions): Alongside the higher loan amounts, small manufacturers are also being granted some fee relief to make borrowing more affordable. For Fiscal Year 2026, the SBA has announced it will waive some upfront guarantee fees for small manufacturers. This means when a manufacturer takes an SBA loan, their initial fees are reduced or zeroed out, immediately saving thousands of dollars. In fact, under current SBA policy for 2026:

• 7a loans to manufacturers of $950,000 or less will have 0% upfront guaranty fee (no fee).
• 504 loans for manufacturers, including those used for refinancing, will have no upfront SBA fee and no annual service fee in Fiscal Year 2026.

Like any other commercial loan, there are other fees/closing costs associated with these loans, but these fee waivers are very helpful.

These fee waivers will cut the cost of borrowing and coupled with what can sometimes be lower interest rates as well as longer terms, SBA financing should make larger projects more financially feasible for small firms. Essentially, manufacturers can borrow more money without a heavier fee burden, allowing more of their capital to go directly into the business investment.

5. Improved Refinancing Options: Another benefit is greater flexibility to refinance existing debt under the SBA programs – potentially at the new higher loan limit. Recent SBA rule changes (in line with the Act’s goals) have broadened refinancing eligibility and removed certain caps, allowing manufacturers to refinance debt even if the project has no “expansion” component, (which was a previous requirement for a 504 refinance loan).This is important because a manufacturer that, say, took on a costly conventional loan or short-term high-interest debt, may be able to refinance that into a longer-term, low-rate SBA loan, improving cash flow and stability and with a new limit of $10 million for the 504 “second,” a company could consolidate or refinance a much larger amount of debt than before.

Businesses can use 7a loans to refinance existing business loans (such as equipment loans, credit lines, or even seller notes from a prior acquisition) if it improves their repayment terms or supports the business’s viability. If the Act becomes law, they could refinance amounts up to $10 million (or more).

For example, a manufacturer paying a high interest rate to a private lender could refinance into an SBA-guaranteed 7a loan at a lower rate, potentially saving significant interest and lengthening the repayment term (up to 10 years for equipment or working capital, or 25 years for real estate), thereby freeing up monthly cash flow.

Overall, the Act not only allows bigger loans but works in tandem with SBA administrative changes to allow better loans – lower fees and the ability to refinance or restructure debt. The combination of these benefits could greatly enhance manufacturers’ financial resilience and growth prospects.

As of this writing, the Made in America Manufacturing Finance Act has passed the House and is awaiting action in the Senate. There is strong bipartisan support, and key Senators have introduced a companion bill (S. 1555) with similar provisions. If and when this Act becomes law, the SBA will implement the higher loan limits, likely quickly given the enthusiasm from current SBA leadership.

Current Status: House passed Dec 1, 2025; Senate received/(read twice/placed on calendar on Dec 4, 2025).

Commercial lending is complicated. SBA lending adds another layer of rules—and the max loan amounts are one of the most confusing aspects of this type of financing, because, for reasons mentioned above “the maximums are not the maximums.”

That said, SBA loans can be a huge advantage due to higher leverage, longer terms and amortization, and often much more flexible underwriting on credit and cash flow. If these higher limits go through, it should help a lot of U.S. manufacturers.

If you’re a manufacturer or business owner and just want to know more about the new possible loan limits, or perhaps more importantly, what is possible right now, feel free to reach out to me at: jking (at) greencommercialcapital (dot) com or you can call us at 1-800-414-5285.