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SBA 504 Interest Rates Increase But Still Remain Hot!

Sep 2020

Even with a slight increase over last month, Small Business Administration (SBA) 504 Loan Program fixed interest rates still remain under 2.5% August to September marks only the 2nd time this year that 504 rates have gone up from the month prior, with current rates being among the 2nd lowest of all time.

• The September 25-year effective interest rate for standard 504 loans is 2.410% and 2.412% for refinance loans.
• The September 20-year effective interest rate for standard 504 loans is 2.366% and 2.368% for refinance loans.
• The 10-year effective interest rate for standard 504 loans is 2.288% and 2.290% for refinance loans (set bimonthly).

The 504 Loan Program also reached a milestone this month and completed its largest monthly funding of loans in the program's 34-year history, including 1,462 loans for $1,284,274,000 – more than double the previous record set in September 2012.

Historic levels of 504 loan closings and fundings were driven by record low interest rates and debt relief provided by the CARES Act. Additionally, small businesses continue to benefit from the SBA's April 2018 introduction of a 25-year maturity option for 504 loans which complemented the program's 10- and 20-year terms. The 25-year term provides an affordable, fixed-rate option with an attractive term that increases the 504 loan program's usefulness by lowering monthly payments and improving borrower cash flow – particularly critical, as small businesses continue economic recovery from the COVID-19 crisis.

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@FloridaFirst.com. Phone: 850.681.3601 or toll-free at 800.504.LOAN.