September 2017
Commercial Lending
SBA 504 Loan Interest Rates Remain the Lowest of 2017

The bonds that funded September’s 20-year Small Business Administration (SBA) 504 loans continued to decline over last month, keeping the effective interest rate (the all-in cost to a borrower) the lowest of the year.  Frank Keane, fiscal and selling agent for 504 funding securities, comments.

SBA 504 Loan Interest Rates504 loans are funded by the sale of bonds (aka debentures) which are pooled and sold on Wall Street each month.  Understanding the 504 Loan Interest Rate

The bonds that funded this month’s 20-year 504 loans were sold to investors at 2.59%, resulting in a final effective interest rate of 4.37% for September for standard 504 loans (compared to 4.53% in August and 4.76% in July). The 20-year effective interest rate for debt refinance loans is 4.41% for September.

The effective interest rate for 10-year standard 504 loans (which is set bimonthly) is 4.15% for September/October (compared to 4.49% in July/August). The 10-year effective interest rate for debt refinance loans is 4.20% for September/October.

Frank Keane, fiscal and selling agent for 504 funding securities, commented following the September bond sale:

“The trend continues as Treasuries complete a two-month rally with the benchmark 10-year Note closing at its lowest yield since the election, and stocks ended two-weeks of gains.

“Stuck in neutral, but it is good for small business borrowers.  Since December 2015, the Fed has raised the Federal Funds rate four times, yet the benchmark Treasury and 20-year debenture rates are lower, with an improved pricing spread.

“The 2017-20 I debenture sale was met with strong investor demand amidst risk-off, safe haven trade that is a contributing factor to current rate levels.  Another factor is QE programs still in effect with the Fed poised to announce its balance sheet normalization later this month,” Keane said.

The SBA 504 Loan Program provides up to 90% financing at below-market, fixed interest rates and long amortization terms for the purchase of major fixed assets, such as owner-occupied commercial real estate and/or heavy duty machinery and equipment.

504 loans are paired with private-sector commercial loans and provide up to $5 million for standard and public policy projects (aggregate limit) and up to $5.5 million per green initiative and small manufacturer projects.  These are SBA 2nd mortgage loan portions only; there is no limit on overall project dollar size.

For more information about SBA 504 loans in Florida, South Alabama or South Georgia, contact a Florida First Capital Loan Officer or email us at  Phone: 850.681.3601 or toll-free at 888.320.5504.