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Low 504 Interest Rates and Fee Eliminations Mean Big Savings for Small Business Borrowers

Feb 2021

Small Business Administration (SBA) 504 loan fixed interest rates continue to hold firm in the upper 2% range, and growing and expanding small business owners are strongly encouraged to take advantage of these cheap rates while they last. Borrowers are also benefitting from the temporary elimination of certain fees on new 504 loans.

• The February 25-year effective interest rate for standard 504 loans is 2.757% and 2.799% for refinance loans.
• The February 20-year effective interest rate for standard 504 loans is 2.720% and 2.764% for refinance loans.
• The 10-year effective interest rate for standard 504 loans is 2.450% and 2.489% for refinance loans (set bimonthly).

The continued low interest rate environment for 504 loans together with recent changes to the SBA 504 Loan Program are really driving attention to 504 loans. Under Section 327(b) of the Economic Aid Act enacted in December, the SBA temporarily eliminated the 0.5% Third Party Lender Participation Fee on loans in senior lien positions in 504 projects and the 1.5% Certified Development Company (CDC) Processing Fee in debenture pricing for all loans approved from the date of enactment of the act (Dec. 27, 2020) and ending on Sept. 30, 2021.

Note: Both fees are eliminated only to the extent the cost of such elimination in fees is offset by appropriations and, consequently, the fees will be eliminated only for so long as appropriations remain available.

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, as well as the refinance of commercial mortgage and other business debt with or without a cash-out option.

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@ffcfc.com. Phone: 850.681.3601 or toll-free at 888.320.5504.