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504 Interest Rates Hit Record Lows for September

Sep 2011

The Small Business Administration's (SBA) 504 loan program is providing long-term, fixed rate financing for commercial real estate and capital fixed assets at the lowest interest rates since the program's inception.

The debentures that funded September's 20-year 504 loans were sold to investors at an interest rate of 2.85%, falling below the previous low of 3.88% in June 2010. The 10-year loan debentures were sold at an interest rate of 1.53 %, which eclipses the previous low of 1.81 % in November 2010.

The final effective interest rates for September (which is comprised of the debenture rate, the note rate and ongoing carrying costs of the program as set by the SBA) are 4.70% for a 20-year 504 loan and 3.77% for a 10-year loan.

SBA 504 loans are paired with private-sector commercial loans, providing up to $5 million of small business financing for standard projects and up to $5.5 million for green initiative and small manufacturer projects (SBA loan portions only; there is no limit on overall project size).

Proceeds from 504 loans may be used for the purchase of fixed assets, including the purchase, construction, expansion or renovation of commercial property and/or the acquisition of industrial machinery and equipment or other fixed assets that have a useful life span of at least 10 years.

“This is tremendous news for small business owners looking to purchase or renovate commercial property, especially when commercial credit in general is currently difficult to obtain,” said Todd Kocourek, president and CEO of Florida First Capital Finance Corporation.

While 504 loan interest rates historically track below conventional rates, the record September rates are a rare opportunity for 504 borrowers.

“With such phenomenally low rates right now, small business owners will be hard pressed to find a better means for financing their growth. Now is a great time to act,” said Kocourek.

Since the program's inception 504 loans have funded over $62 billion in loans to over 130,000 small businesses. In turn, those small businesses have created or retained over 2.1 million jobs for our national economy.

For more information about SBA 504 loans in Florida, contact Florida First Capital by visitingwww.ffcfc.com, emailing atinfo@ffcfc.comor calling 888.320.5504.