May 2019
Commercial Lending
SBA 504 Loan Interest Rate Report: May 2019

The bonds that funded May’s (Small Business Administration) SBA 504 loans continued on a downward trend, resulting in a full-term effective interest rate of 4.26% for standard 20-year loans to be fixed at its lowest point since October 2016.  That’s 123 basis points below the Bank Prime Rate. The last time the 504 effective rate was this far below Prime was in September 2007, well over a decade ago.

SBA 504 Loan Interest Rate Report“We are now six months into this new cycle of (below) Prime SBA 504 effective rates.  With the Fed expected to be on the sidelines for quite some time, the wide gap between the effective rate and the Prime Rate should persist,” commented Frank Keane, fiscal and selling agent for SBA 504 program funding securities, following the May bond sale.

“The prior cycle lasted 32 months (we are not predicting that the current cycle will last that long). With the Fed on the sidelines, inflation expectations low and the economy doing reasonably well, it is a great time for 504 fixed interest rate funding,” he said.

The 20-year effective interest rate for debt refinance loans is 4.29% for May.

The 25-year effective interest rate for standard 504 loans is 4.39% for May.  The 25-year effective interest rate for debt refinance loans is 4.42% for May.

The 10-year effective interest rate for standard 504 loans is 4.36% for May/June (set bimonthly).  The 10-year effective interest rate for debt refinance loans is 4.39% for May/June.

Understanding the 504 Loan Interest Rate

The SBA 504 Loan Program provides up to 90% financing at below-Prime, fixed interest rates and long amortization terms up to 25 years for the purchase of major fixed assets, such as owner-occupied commercial real estate, energy efficient “green” initiatives and/or fixed heavy duty machinery and equipment.

504 loans are paired with private-sector commercial loans and provide up to $5 million of aggregate SBA eligibility on standard 504 projects; up to $5.5 million per 504 energy efficient green project not exceed $16.5 million in the aggregate; and up to $5.5 million per eligible small manufacturing project with no limit on total SBA dollars available.  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 Alabama, Florida or South Georgia, contact a Florida First Capital Loan Officer or email us at  Phone: 850.681.3601 or toll-free at 800.504.LOAN.