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SBA 504 Loan Interest Rates
May 2022
25-Year Fixed Rate Standard:
5.119%
25-Year Fixed Rate Refinance:
5.133%
20-Year Fixed Rate Standard:
5.061%
20-Year Fixed Rate Refinance:
5.075%
10-Year Fixed Rate Standard:
4.931%
10-Year Fixed Rate Refinance:
4.948%
Full-term fixed interest rates shown; includes all servicing fees
Mar 2014
The effective interest rate for 20-year Small Business Administration (SBA) 504 loans that funded in March continued to hold steady in the low five percent range while the 10-year rate declined slightly for March/April.
This is continued good news, however 504 rates will likely start rising in the near future following the Federal Reserve's recent decision to begin tapering its monthly bond buying program and prudent small business borrowers should lock in these historically low 504 rates now.
The debenture bonds that funded this month's 20-year 504 loans were sold to investors at 3.21%, resulting in a final effective interest rate of 5.28% (compared to 5.30% last month). Year to date, the 20-year rate has averaged 5.37%.
For 10-year 504 loans (which are set bimonthly), the debenture bonds were sold at 1.96%, resulting in a final effective interest rate of 4.48% for March/April (compared to 4.67% for January/February). Year to date, the 10-year rate has averaged 4.57%.
Both the 20- and 10-year SBA 504 interest rates are fixed for the term of the loan and require as little as a 10% borrower down payment.
504 loans are funded by the sale of debentures (or bonds) which are pooled and sold on Wall Street each month. The effective interest rate - the rate borrowers pay - is comprised of the debenture rate (which is pegged to an increment above the current market rate for U.S. Treasury issues), the note rate and ongoing carrying costs of the program as set by the SBA.
Frank Keane, fiscal agent for Development Company Finance LLC - the entity responsible for marketing and selling 504 funding securities - commented following the March debenture sale:
“Trend reversal - after testing 2.60% the day of Russia's incursion into Crimea, 10-year yields reversed to 2.73% the day of our pricing and closed last week at 2.79%. Part of that move resulted from the market hitting resistance and was then complimented by a better than expected Non-Farm Payroll report of +175,000 on Friday.
“While the three-month average gain of 129,000 is far below the previous year's gains of 194,000, the Fed is still expected to reduce its monthly bond purchases when it next meets on March 18th.
“Along with an expected improvement in economic data this could accomplish the near-term move to yields above 3.0% that many market analysts have been predicting. What could prevent that from happening is an escalation of the events in Ukraine resulting in another flight to “safe haven” investments like Treasury notes,” Keane commented.
For small business owners looking to expand and modernize their operations through the purchase of major fixed assets, the SBA 504 Loan Program offered through Florida First Capital provides up to 90% fixed rate financing with repayment terms up to 20 years for the purchase of commercial property and/or fixed heavy duty machinery and equipment.
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 dollar size).
For more information about SBA 504 loans in Florida,contact a Florida First Capital Loan Officer hereor email us atinfo@ffcfc.com. Phone: 850.681.3601 or toll-free at 888.320.5504.