Glossary · The loan itself
Construction loan
In short
A construction loan funds new construction or significant renovations, typically disbursed in stages as work progresses. While an SBA 7(a) can fund real estate, it's not a true construction loan product in the conventional sense.
What it means in a deal
For a business acquisition, the 7(a) loan can include funds for acquiring owner-occupied commercial real estate and minor leasehold improvements. However, if your deal involves significant ground-up construction or major rehabilitation, the 7(a) program is less suitable, or you'll need a separate conventional construction loan first, followed by a 7(a) to refinance it. Understand the scope of any real estate work.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Construction loan
- Can an SBA 7(a) loan cover construction or renovation of a business property?
- Can an SBA 7(a) loan be used for construction or renovation of business property?
- Can an SBA 7(a) loan be used to buy a commercial building currently under construction?
- Can I use an SBA 7(a) loan for construction or renovation of a business property?
- Can I use an SBA 7(a) loan to finance renovations or new construction for my business?
- Can I use an SBA 7(a) loan to finance a new business location or building construction?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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