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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
Oct 2021
Q: Does the Small Business Administration (SBA) have any specific requirements if, as a small business owner, I opt to purchase land and construct a building instead of buying an existing building? Additionally, if I am a licensed contractor, can I do the construction (or major renovation) myself?
A: SBA loans that involve new construction or renovations do have additional due diligence and documentation requirements when compared to straight acquisition loans.
Some of these additional requirements include:
o This is a non-negotiable federal requirement regardless of the state in which the building was constructed or that states particular building code requirements.
o After construction is completed, the Certified Development Company (CDC) must obtain a statement that the building was built with only minor deviations (if any) from the plans and specifications upon which the original estimate of value was based. If the CDC cannot obtain such a statement, then the CDC cannot close the loan without the Sacramento Loan Processing Center’s (SLPC) prior written permission.
o In the event the borrower is reimbursed, the CDC will require a copy of the canceled check from the borrower to the vendor as well.
o Of note: for loans structured with an Eligible Passive Company (EPC), the EPC must leave 100% of the rentable property to the Operating Company (OC), who can then sublease as appropriate.
o The borrower/contractor is experienced in the type of construction and has all appropriate licenses;
o The cost is the same as, or less than, what an unaffiliated contractor would charge as evidenced by 2 bids on the work (this must be provided at the time of application); and
o The borrower/contractor will not earn a profit on the construction.
If you have a question for our SBA 504 loan experts, email us at info@ffcfc.com.