If you lend to manufacturers, you already know the tension. These are exactly the clients you want: real assets, real revenue, real staying power. They are also the clients whose needs can strain a conventional credit box. The equipment is expensive and specific. The working capital need arrives in lumps, usually right when the biggest order in company history lands. Growth outruns the balance sheet, and you are left choosing between stretching policy and watching a 20-year relationship walk to a larger institution.
This year, two changes at the SBA rewired that math.
504 Rules Give Manufacturers More Flexibility
The $5.5 million manufacturing provision is not new. Small manufacturers have long been eligible for up to $5.5 million in SBA 504 debenture financing for a qualifying project, and SBA has allowed multiple 504 loans when each loan is tied to a distinct project. What changed July 4 is the relationship between the 7(a) and 504 programs; a borrower’s 7(a) balance no longer reduces the maximum 504 financing available, allowing eligible borrowers to access up to $5 million through 7(a) and up to $5 million through 504, subject to each program’s requirements and limits.
SBA also clarified that a 504 project may include multiple eligible assets that are financed simultaneously. For small manufacturers, that can be particularly useful when an expansion involves more than one major fixed asset — for example, purchasing a facility while also acquiring a production line. Rather than treating this as a single project, the clarification provides greater flexibility to structure it as two 504 projects, allowing up to $5.5 million for each.
Zero Fees, But the Clock Is Ticking
For fiscal year 2026, as part of its Made in America push, the SBA waived both the upfront guaranty fee and the annual service fee on SBA 504 loans to small manufacturers (NAICS Sectors 31 through 33) and eliminated the upfront fee on SBA 7(a) manufacturing loans of $950,000 or less. On a $2.5 million facility purchase, that is roughly $5,000 saved at closing and about $37,400 saved over the life of the loan.
The oldest objection in SBA lending is that the fees make it expensive. For manufacturers this year, that objection does not exist.
And here’s the part that matters for your pipeline: The current fee waiver is scheduled to run through fiscal year 2027. We don’t yet know what SBA’s fee structure will look like after that, so manufacturers with projects in the pipeline may want to take advantage of the current program while these savings are available.
The Structure Works as Hard for You as It Does for Them
None of this requires charity from your credit committee. On an SBA 504 project, your institution holds a first lien at roughly 50% loan-to-value on collateral that would otherwise give policy fits, the client puts down as little as 10%, and the debenture covers the rest at a long fixed rate — 25-year or 20-year terms on real estate and 10-year terms on equipment to match the life of the assets, instead of fighting it.
On the SBA 7(a) side, the guaranty covers the ground conventional underwriting cannot reach: projection-based expansion and the working capital that turns new capacity into filled orders. You keep the deposits, the treasury business and the relationship.
Manufacturers are being asked to grow faster than their balance sheets allow, and, for once, Washington has made financing easier rather than harder. Neither change should be treated as permanent. The fee waiver has a hard deadline; the expanded limit is policy, and policy moves. The lenders who act while the window is open will own these relationships for decades.
That is where we come in. Bring us the deal early and B:Side Capital will handle the SBA mechanics alongside you, providing eligibility, structure and a speedy timeline. Reach out to our team to talk through your next manufacturing deal by emailing client-relations@bside.org or calling (303) 657-0010.
