June 2019
Commercial Lending
Historical First: SBA 504 Loan Interest Rate Hits All-Time Low

For the first time since inception of the Small Business Administration (SBA) 504 Loan Program some 33+ years ago, the 20-year full-term effective interest rate fell below 4%.  There truly has never been a better time for small business entrepreneurs to utilize the 504 loan program.

SBA 504 Loan Interest Rate ReportThe 20-year rate for standard 504 loans that funded this month was fixed at 3.98%, edging below the 4.01% record set in December 2012.  At 152 basis points under the Bank Prime Rate, the June funding is the furthest below Prime that 20-year rates have been since May 2007.

Even if the Federal Reserve makes the two ¼-point policy rate cuts anticipated by the market this year, the 504 effective rate may remain approximately one full point below prime (not including any additional spread over prime charged by many commercial real estate lenders).

The 25-year fixed rate is just a little higher at 4.08% (Prime -141 bps) and the 10-year fixed rate is 4.36% for May/June (set bimonthly).

See also 25-Year Term Option for SBA 504 Loans Reaches $1 Billion Milestone

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.

Understanding the 504 Loan Interest Rate

For more information about SBA 504 loans in Alabama, Florida or South Georgia, contact a Florida First Capital Loan Officer or email us at info@FloridaFirst.com.  Phone: 850.681.3601 or toll-free at 800.504.LOAN.