SBA loans for cut stone and stone product manufacturing: big machines, bigger loans

Who is in this code, and what the figures say

NAICS 327991 covers businesses that cut, shape and finish natural and engineered stone: granite and quartz countertop fabricators, monument and memorial makers, and shops producing architectural stone such as sills, treads, veneer and fireplace surrounds. Most of the SBA borrowers in the data are countertop fabricators serving kitchen dealers, builders and remodelers. Contractors who set stone on site are classed separately; see masonry contractors and tile and terrazzo contractors. Cabinet shops that also fabricate tops sit under wood kitchen cabinet and countertop manufacturing.

Two things stand out. The loans are large for businesses that support a median of 7 jobs, which reflects the price of a modern fabrication line: a CNC bridge saw, a waterjet or saw-jet, an edge profiler, a slab handling system and the building to hold them. And almost no one starts a stone shop with an SBA loan. Start-ups were 2% of borrowers; a new fabricator usually begins with used equipment, a single saw and a few installers, and comes to an SBA lender once it has tax returns showing the work is there.

The median rate matched the national one at twice the loan size. SBA's variable-rate caps fall as loans grow, from base plus 6% between $50,001 and $250,000 to plus 3% above $350,000, but the middle half of rates still ran from 9% to 11.25%, so the lender's view of the file matters more than the cap band. See current SBA loan rates and SBA maximum interest rates.

What a lender learns from the job board

A countertop fabricator earns on throughput: jobs templated, cut, finished and installed each week, and the margin left after slab cost, labor and waste. Lenders build their view from the shop's own records, and the questions are specific.

• Who sends the work. A shop that depends on two home builders or one big-box kitchen program is carrying concentration risk; a shop with dozens of kitchen dealers and designers is not. See customer concentration and debt.
• How the cycle has treated it. Countertop demand follows new housing and remodeling. A lender will want to see how revenue behaved in a slower year, not just the best one.
• Deposits and backlog. Most residential jobs collect a deposit at template. Deposits help cash flow, but they are also a liability: work owed to customers. A lender will separate deposit cash from earned cash on the balance sheet.
• Remakes and waste. A broken slab or a mis-cut top is lost margin. Shops that track yield per slab make a stronger case than shops that do not.

Monument makers are a different business on the same code. Their demand is steadier and tied to families and cemeteries rather than housing, with a busier spring ahead of Memorial Day, and they often hold customer deposits on orders for months. Architectural stone shops work on commercial projects and carry the receivables, retainage and bonding questions of a subcontractor. The lender's first job is to work out which of the three it is looking at.

Stone shops are lent on what the job board earns after slab cost, labor and waste, not on what the equipment cost.

Saws, slabs and buildings as collateral

Fabrication equipment is expensive new and loses value quickly once installed, because it is heavy, needs rigging to move, and newer machines keep raising the standard. Lenders value it on net orderly liquidation value, often backed by an equipment appraisal, and treat it as secondary support. Slab inventory counts for less still: a partial slab of a discontinued color has little resale value, and much slab stock is imported, so its cost can shift with trade policy.

Fourteen 504 loans went to this industry at a median of $651,000. Stone shops need high ceilings, overhead cranes or gantries, heavy floor slabs, three-phase power and water handling for wet cutting, which makes owning the building attractive and a move expensive. 504 finances owner-occupied real estate and long-life equipment, typically 50% from a bank, 40% from the CDC and 10% from the borrower, and the business must occupy at least 51% of an existing building. See SBA 7(a) vs 504. For machines alone, compare equipment financing vs SBA 7(a): a shop that already has manufacturer or equipment-lender financing on its saws should expect those liens to come up in any SBA discussion.

Lenders will also ask about workplace safety. Cutting and polishing stone, and engineered stone in particular, creates respirable silica dust, and regulators have been paying closer attention to fabrication shops. A shop that uses wet cutting, dust collection and air monitoring, and can show it, answers a question a careful credit officer will raise.

Buying a fabrication shop

Seventeen loans, 16.7% of the total, financed a change of ownership at a median of $874,800 and a median rate of 9.5%. That share is well above the national 10.4%. Fabrication shops sell well to buyers because the equipment, trained cutters and installers, and dealer relationships are hard to assemble from scratch; a buyer who already runs a shop can also add a competitor's volume to its own saws.

The rules are the same as for any 7(a) acquisition. The buyer injects at least 10% of total project costs; a seller note counts toward up to half of that only if it is on full standby for the life of the SBA loan; and SBA prohibits an earnout to the seller. Where the amount financed, less appraised real estate and equipment, exceeds $250,000, an independent business valuation is required and the loan cannot exceed it. In a stone shop the equipment appraisal therefore matters twice: once as collateral and once in the valuation arithmetic. See the SBA valuation requirement and seller notes on standby.

From 1 October 2026, under SOP 50 10 8.1, a change of ownership must show 1.25x debt service coverage on historical results, financial due diligence is required on every change of ownership, and a quality of earnings report is required on acquisitions of $3 million or more excluding real estate. The seller may not stay on as an owner, officer or employee, but may consult for up to 12 months, or up to 24 months from 1 October 2026. In a fabrication shop, that transition period is when the dealers and builders meet the new owner. See buying from a retiring owner.

Preparing a stone shop's SBA file

Start with the SBA checklist: business tax returns for 2–3 years, a P&L and balance sheet with a year-to-date P&L through last month-end, a debt schedule with copies of any notes being refinanced, and personal tax returns and a personal financial statement for each owner of 20% or more, each of whom personally guarantees the loan. An acquisition adds the target's latest full year of figures and the letter of intent. For a fabricator, add:

• Sales by customer for the last two full years, split between dealers, builders, retail and commercial work
• Monthly revenue for at least two years, so the lender sees the housing cycle in the numbers
• The equipment list and any equipment loan or lease agreements
• A deposit ledger reconciled to open jobs
• Safety practices and any inspection history for dust control
• For a building purchase, the property details and intended occupancy

SBA requires debt service coverage of at least 1.15x, and 1.0x globally including the owners; conventional banks commonly look for 1.25x. A shop that has financed its saws with equipment lenders should expect those payments to be counted when coverage is measured; see DSCR vs FCCR and maintenance vs growth capex. Seasonal working capital for slab purchases often fits a line better than a term loan; see lines of credit for manufacturers. Transparent builds the full lender package — financing model, lender presentation, blind teaser and underwriting memo — in a day once the documents are in, and its book holds 278 lenders that write SBA 7(a) and 504. On SBA loans the lender pays Transparent, not the borrower.