September 2019
Commercial Lending
SBA 504 Loan Interest Rates Go Even Lower … Wow!

The fixed effective interest rates for Small Business Administration (SBA) 504 loans continue to get cheaper.  September makes 10 consecutive months that 504 loan interest rates have dropped and the 4th consecutive month of the lowest rates in the program’s history.

SBA 504 Loan Interest Rate ReportThe 25-year rate for standard 504 loans that funded in September fixed at 3.45% and 3.49% for refinance loans (down from 3.63% and 3.66%, respectively, in August).

The 20-year rate for standard 504 loans fixed at 3.35% and 3.39% for refinance loans (down from 3.53% and 3.56% last month).

The 10-year rate for standard 504 loans for September/October (set bimonthly) fixed at 3.56% and 3.60% for refinance loans (down from 3.93% and 3.97% for refinance loans for July/August).

Frank Keane, fiscal and selling agent for SBA 504 program funding securities, commented following the Sept. 5 bond sale:

“As the market was headed to lower rates, a surprise announcement to resume trade talks next month gave it pause, sending rates higher and boosting equities which allowed the three major indexes to close higher by at least 1.5% on the week.

“Taking advantage of global demand for quality assets the global, investment grade corporate market saw what was described as a month’s worth of issuance in just three days – $140 billion, with $74 billion of that in the US.  This was accomplished without any mega deals as the US activity represented 45 issuers who are utilizing this low rate environment to raise cash to prepay outstanding debt and extend their maturities, much the same as homeowners who are refinancing their mortgages.

“And demand for quality assets benefited the SBA 504 program, which sold $385,364,000 term debentures with very strong subscription levels that permitted pricing at spreads far tighter than comparable Agency CMBS. (T)he 20-year debenture priced at 1.98%, second lowest in history, while the 25-year debenture was priced at 2.14%.  Of particular note is the growth in the 25-year series, which last week was 22% larger than the 20-year issue.  Both issues provided historically low, ongoing effective rates for small business borrowers,” Keane said.

The SBA 504 Loan Program provides up to 90% financing at below-market, fixed interest rates (no ARMs) and long amortization terms up to 25 years (no balloons) for the purchase of major fixed assets, such as owner-occupied commercial real estate, energy efficient “green” initiatives and heavy duty machinery and equipment and refinancing of conventional real estate loans and other business debt.

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  Phone: 850.681.3601 or toll-free at 800.504.LOAN.