SBA 504 Loan Interest Rates
Official monthly SBA 504 effective interest rate tables can be found at Eagle Compliance LLC. 25- and 20-year term loans fund every month; 10-year term loans fund every other month. Effective interest rates are inclusive of servicing fees, which are subject to credit risk of the applicant.
Q: My business has been hit hard because of the pandemic so I have had to make some operational and financial decisions this year to cut back on expenses any way I can. If I don’t pay my real estate property taxes for last year, what is the harm to the Small Business Administration (SBA)?
A: Timely payment of real estate and personal property taxes not only meet the terms of your loan agreement, but it is a requirement of your loan authorization and critical to ensuring the liens held by both the first mortgage lending partner and the SBA are not compromised. It also guarantees your ownership of the property is not put at risk.
Outlined in the loan authorization are the ongoing conditions and terms required of the borrower, some of which are as follows:
Section E. ADDITIONAL CONDITIONS:
7. Certifications and Agreements:
b. At or prior to 504 loan closing, the Certified Development Company must require the borrower and operating company (OC) to certify they will:
(5) Taxes – Pay all federal, state and local taxes, including income, payroll, real estate and sales taxes of the business when they come due.
c. Prior to the 504 loan closing, the CDC must require the borrower and OC to certify that they will not, without prior written consent of the CDC and SBA:
(3) Transfer of Assets – Sell, lease, pledge, encumber (except by purchase money liens on property acquired after the date of the note), or otherwise dispose of any of the borrower’s property or assets, except in the ordinary course of business.
Florida Statutes require payment of real estate property taxes by Nov. 1 of each year or as soon thereafter as the certified tax roll is received by the tax collector. Taxes become delinquent on April 1 following the year in which they are assessed or immediately after 60 days have expired from the mailing of the original tax notice, whichever comes first; if not paid in full.
Florida law clearly states that all taxes imposed pursuant to the state constitution and laws of the state of Florida shall be a first lien, superior to all other liens, on any property against which the taxes have been assessed. Therefore, if real estate property taxes go unpaid, and a tax certificate is issued against our 504 loan project property, which results in the subsequent issuance of a tax deed, that lien is superior to both the first mortgage lending partner and SBA lien(s). This will result in the immediate default of the SBA 504 loan.
Therefore, Florida First Capital/First Capital Finance encourages all 504 loan borrowers to maintain current real estate property taxes on their 504 project property and familiarize themselves with the terms of their 504 Loan Authorization for Debenture Guarantee as well as their 504 loan note as well as all other loan documentation.
Please reach out to us with any questions by email at info@ffcfc.com or phone at 850.681.3601 or toll-free at 888.320.5504.
If you have a question for our SBA 504 loan experts, email us at info@ffcfc.com.
