Understanding Your Borrowing Options as a Small Business Owner
by Dawn DeRidder
Vice President and SBA Banking Business Officer
It’s serious business to have your own small business. We understand that at The National Bank of Indianapolis. That’s why, in 2026, we are focusing on supporting our community’s business owners more than ever with various banking and lending options, including Small Business Administration (SBA) loans.
SBA loans can be a key tool for helping businesses access capital and they may offer more flexible terms than traditional commercial loans. It’s important to understand the differences between the types of loans within the context of your business needs. If an SBA loan is right for your business, you may save cash by lowering down payments and monthly payments. That means potentially more cash flow and reduced costs for your business over time.
Within SBA lending, there are various options including the two most common programs: the 7(a) and the 504. To understand the difference, the SBA 7(a) loan is your flexible, all‑purpose option when you need working capital, want to buy a business, purchase new equipment, or simply want room to maneuver. The 504 loan is your go‑to for larger, long‑term projects like purchasing or improving real estate or equipment, and it offers fixed rates and predictable payments. If your project is broad, think 7(a); if it’s property‑focused, think 504.
Traditional commercial lending typically involves the company putting down 20-25%, with financing for the remaining cost with a term of 5 – 7 years for equipment or 15 years for real estate. If your company doesn’t have 25% cash to put into your project, SBA lending can help!
SBA loans are different due to their flexibility with cash injection levels, terms, and collateral requirements. Keep in mind that every loan request is evaluated on its own merit, but there are general variations:
SBA Loans
- 10% cash injection usually required
- Longer terms available; 25 years for the purchase of real estate
- A collateral shortfall is okay if all the available collateral is considered
- Term and amortization match, meaning you never have to refinance and pay additional fees
Commercial Loans
- 20% - 25% cash injection is usually required, depending on the project
- Shorter terms, with real estate financed at 15-25 years, depending on the type of real estate and/or age of the building
- Loans must be fully collateralized
- Usually, commercial loans will have a shorter term, with a longer amortization – meaning you will need to renew/refinance the loan
At The National Bank of Indianapolis, we support our community’s small business owners based on their needs and goals. If your company is ready for financing, you may want to consider the potential advantages of SBA lending. Connect with our Commercial Banking experts, including our SBA specialist, today.