For around $700.00 (I know you said $500.00
) Some of the less expensive machines only use a 4 x 4 hoop which limits your designs.
The Brother PE770 is a good machine. You can do a 5 x 7 hoop(which is included) and by a hoop kit for less than $ 80.00 on Amazon (last time I looked). That hoop kit includes a 12 x 5 as well as a 5 x 7, a 4 x 4 and a small 1 x 2 1/2 hoop as well as some embroidery thread (6 spools).
It uses a Flash drive which you can download designs from your computer and transfer them on to the flash drive and hook into the machine.