February 2020
Commercial Lending
Rates Drop! February 2020 SBA 504 Loan Interest Rate Report

The February effective fixed interest rates for Small Business Administration (SBA) 504 loans that funded this month dropped 25 basis points over last month, marking 9 successive months with rates under 4% and the 2nd lowest debenture rates recorded of all-time!

SBA 504 Loan Interest Rate ReportWe encourage our commercial lending partners to share these phenomenally LOW SBA 504 loan fixed interest rates with their growing and expanding small business borrowers before they’re gone!

  The February 25-year effective interest rate for standard 504 loans is 3.463% and 3.465% for refinance loans.

  The 20-year effective interest rate for standard 504 loans is 3.392% and 3.394% for refinance loans.

  The 10-year effective interest rate for standard 504 loans for January/February (set bimonthly) is 3.804% and 3.806% for refinance loans.

Understanding the 504 Loan Interest Rate

Frank Keane, fiscal and selling agent for SBA 504 program funding securities, commented following the Feb. 6 bond sale:

“On Thursday, the SBA 504 program saw its 20 and 25-year debenture rates decline 25 bps from January levels, benefiting from the recent flight to quality.  Continued demand for high quality assets helped tighten their financing spreads by 4 bps with both issues strongly over-subscribed.  At debenture rates of 2.07% and 2.20%, these debentures (bonds) provide small business borrowers with ongoing cost of funds of 3.39% and 3.46% respectively. Both levels are significantly lower than Prime Rate and offer attractive alternatives to adjustable rate loans which use that marker for a base rate,” said Keane.

The SBA 504 Loan Program provides up to 90% financing at below-market, 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, renovations, new construction, 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 info@FloridaFirst.com.  Phone: 850.681.3601 or toll-free at 800.504.LOAN.