A conventional business loan from Bank of America is solely the bank’s risk and is subject to Bank lending guidelines. An SBA Express or 7(a) program loan, on the other hand, is a business loan that splits the risk between the Bank and the SBA, which guarantees a portion of those loans. Because of this split risk, SBA loans are subject to the lending guidelines of both the SBA and Bank of America, which in turn is able to take on more risk and provide more flexible terms.
SBA 504 (the third SBA program in which Bank of America participates) is an SBA loan participation program in which Bank of America directly lends a portion of the total financing need, with the remainder being lent by the Certified Development Company (CDC). The CDC portion is guaranteed by the SBA.