Good morning!

-TCoL

Missed our last feature article? The Tariff Refund Most Small Business Owners Have Not Claimed

2026 will redefine IT as a strategic driver of global growth. Automation, AI-driven support, unified platforms, and zero-trust security are becoming standard, especially for distributed teams. This toolkit helps IT and HR leaders assess readiness, define goals, and build a scalable, audit-ready IT strategy for the year ahead. Learn what’s changing and how to prepare.

Download the Toolkit

You have probably seen the headlines this week. The SBA raised its loan cap from $5 million to $10 million. Every small business publication, every LinkedIn post, every lender email landed on the same sentence. The sentence is not accurate.

No individual loan cap changed. The 7(a) program cap is still $5 million per loan. The 504 program cap is still $5 million in SBA debentures for a standard borrower, or $5.5 million per project for small manufacturers and qualifying energy projects. Both numbers are set by statute and were not touched by the new rule.

What changed is an SBA operating policy that previously prevented you from using both programs at the same time. Until now, the SBA’s own procedures treated the two programs as a single capped pool. If you had a $5 million 7(a) loan, you could not also have a 504 loan. The new policy notice, effective July 4, 2026, acknowledges that the two programs are authorized under separate statutes with independent limits, and removes that coupling.

For a fuller look at how the 7(a) program works today and what lenders are weighing on every application, read our prior article, The SBA Loan Program Still Works. Getting Approved Is Harder.

Starting July 4, 2026, a qualified borrower can hold a 7(a) loan up to $5 million and a 504 loan up to $5 million in SBA debentures at the same time, for a combined total of up to $10 million in SBA-backed financing. Small manufacturers can reach $10.5 million by stacking a $5 million 7(a) loan with a $5.5 million 504 project. There is a sequencing condition. The 7(a) loan has to be approved first, then the 504 transaction approved by the CDC second. You cannot do it the other way around.

The two programs do different things, which is why combining them is useful. A 7(a) loan funds working capital, equipment, real estate, business acquisition, even revolving lines of credit. A 504 loan is narrower. It is long-term, fixed-rate financing for major fixed assets, which in practice means real estate and heavy equipment. The new rule lets you use the 7(a) loan for what 7(a) does well, then add the 504 for the building or the production equipment. Before, you had to pick one.

The borrowers this rule helps most are small manufacturers. They were already allowed to take multiple 504 loans on distinct projects, each up to $5.5 million, with no aggregate cap. The new rule adds $5 million of 7(a) access on top. The notice also clarifies that a single 504 Project can now include multiple assets financed simultaneously, which the SBA itself describes as “especially impactful for Small Manufacturers who may be purchasing a facility and a production line simultaneously.”

The rule takes effect July 4, 2026. Nothing has changed yet. Any lender pushing you to apply today is not operating under the new policy.

You still have to qualify under SBA size standards, credit underwriting, and personal guarantee requirements. A larger combined ceiling does not make a marginal application stronger. Underwriting is underwriting.

The loans are still made by banks and CDCs, not by the SBA. The SBA guarantees a portion of the 7(a) loan to the lender, and the CDC issues the debenture on the 504. Both pieces still have to be underwritten by the lender. Larger combined financing means more documentation, more time, and two separate transactions to close in sequence. Plan accordingly.

Personal guarantees still apply, on both loans, for any owner of 20 percent or more.

The headlines made it sound like the SBA raised what any one business can borrow. That is not exactly what happened. The agency removed an internal procedural barrier between two programs that have always had independent statutory limits. The practical result is real: a qualified borrower who could previously access $5 million in SBA-backed financing can now access up to $10 million by using both programs in sequence, which is useful. However, that is not what you are reading in social media and on the internet in general.

The Co. Letter is provided for general informational purposes only and is not legal, tax, or financial advice. Consult your SBA lender, attorney, and CPA about your specific situation.

Have an interesting business question and need a free bit of advice? Send your question to [email protected]. No confidential info, please!