SBA 504 Loan Program
If you are looking for long term, fixed-rate financing to buy or build your own facility, the SBA 504 loan program provides this. 20-year fixed rate for real estate and 10-year fixed rate for equipment. Other advantages are low down payment and below market rate interest rate. The SBA 504 requires a minimum of 10% down payment where a conventional bank loan requires 20% (an additional 5% equity is required for a start-up business, 5% equity is also required on special purpose facilities).
The term of the loan depends upon the nature of the proceeds:
* Land and Building – 20 years
* Machinery and Equipment – 10 years
Typical Structure of a Loan:
Bank – 50% – 1st Mortgage
SBA 504 – 40% – 2nd Mortgage
Borrower’s Equity – 10% *
* This is a minimum requirement – An additional 5% equity is required for a start-up business, 5% equity is also required on special purpose facilities (hotel/motels, gas stations, car washes, funeral homes, theaters, etc.) Therefore, if you have a start-up special purpose project, the borrower will need to contribute 20% equity into the project.
Start Up & Special Purpose Facility Structure:
Bank – 50% – 1st Mortgage
SBA 504 – 30% – 2nd Mortgage
Borrower’s Equity – 20%
Ineligible Purposes:
* Working Capital
* Franchise Fees
* Inventory
* Rolling Stock
Ineligible Businesses:
* Nonprofit Organizations
* Financial Institutions
* Gambling Facilities
* Real Estate Development Companies
504 Rate History
20 Year Note Rate History
2018
Month | Rate |
---|---|
January | 2.96978 |
February | 3.27350 |
March | 3.2328 |
April | 3.36454 |
May | 3.55703 |
June | 3.65812 |
July | 3.59736 |
August | 3.63801 |
September | 3.58727 |
October | 3.83031 |
November | 3.93129 |
December | 3.59738 |
2019
Month | Rate |
---|---|
January | 3.42549 |
February | 3.31400 |
March | 3.25325 |
April | 3.03050 |
May | 2.92913 |
June | 2.64515 |
July | 2.57428 |
August | 2.18861 |
September | 2.01594 |
October | 2.11756 |
November | 2.40171 |
2020
Month | Rate |
---|---|
January | 2.36123 |
February | 2.10736 |
March | 1.51808 |
April | 1.67056 |
May | 1.39601 |
June | 1.23325 |
July | 1.05033 |
August | .91764 |
September | 1.07039 |
October | 1.10090 |
December | 1.13145 |
2021
Month | Rate |
---|---|
January | 1.20277 |
February | 1.26377 |
March | 1.54858 |
April | 1.56902 |
May | 1.39601 |
June | 1.31461 |
September | 1.40620 |
October | 1.56884 |
November | 1.57906 |
December | 1.68071 |
2022
Month | Rate |
---|---|
January | 1.87372 |
February | 2.25968 |
March | 2.57423 |
April | 3.43547 |
May | 3.88065 |
SBA 504-7a Loan Comparison
This will give you an overview of the SBA 504 and SBA 7(a) loan programs and compare the features of each. For more information, click here to contact a loan officer in your area.
At-A-Glance Comparison
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