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.
Standard Operating Procedure (SOP) 50-10(5)(C) for 504 lender and certified development company (CDC) loan programs became effective on Oct. 1, 2010. Following are some of the more frequently asked questions about the updated SOP.
A1. Yes, the $5.5 million debentures for manufacturers and energy efficiency projects are based on the project rather than the operating entity so it is possible for one operating company to have more than one $5.5 million debenture.
A2. Yes, the Small Business Administration (SBA) changed its ruling for all “passive income” properties, those which rely on rental income and the owner controls both entry and exit. The passive income guidelines affected self-storage, mobile-home parks, office suites, flea markets, shopping centers and similar businesses. Previously, self-storage facilities were only eligible if more than 50% of the business revenue came from sources other than monthly rent.
A3. The SBA is looking for Form 912s on key individuals. For instance, if a hotel has an absentee owner the on-site general manager is key to the success of the organization, whether or not he/she has an ownership interest. In this case, a Form 912 will be required on the manager.
A4. Mixed use properties, where the residential space is 49% or less of the total property, are still eligible. In addition, if the nature of the business requires a resident owner or manager to live on the property, the residential space cannot exceed 49% of the total property.
A5. No, the Supplemental Information Form must still be included in the application.
A6. This section was amended to coincide with the 7(a) loan program language. Using a fair market value for OREO properties is seen as a potential conflict of interest and the appearance of a bank bailout.
A7. Yes, the contract price can be more than the liquidation value or lender's costs with the borrower making up the difference either in personal resources or other financing.
A8. This change coincides with the file retention guidelines the SBA must adhere to.
A9. No, a separate statement must be signed by the borrower consenting to the amortization prior to the debenture funding.
A10. The SLPC is looking for a credible explanation on how the economy in the area is still suffering from a base closure that occurred over 10 years ago.
Click hereto access a complete copy of SOP 50-10(5)(C).
For more information about 504 loans in Florida, contact Florida First Capital by visitingwww.ffcfc.com, emailing us atinsider@ffcfc.comor calling 888.320.5504.
