SBA 504 Rates for the Current Month
The 504 loan rate (effective rate) for 20 year commercial real estate loans is 4.15%* The "effective rate" is inclusive of all servicing fees. (Some lenders do not advertise the "all inclusive" rate, so you may see the rate advertised slightly lower in some areas of the country).
The 504 program consists of 2 loans:
- first mortgage for approx 50% of the project cost
- 504 second mortgage guaranteed by the SBA
SBA 7a Loan Rates
SBA 7a rates are typically Prime + a margin "not to exceed 2.75%," although some lenders are starting to offer attractive fixed rates that can be fixed for up to 5 years and in some cases for the full 25 years if the majority of the loan proceeds are used for commercial real estate.
Please contact us at 1-800-414-5285 for more information about the possibility of a fixed rate.
The margin for the variable rate 7a loan is set by the lender based on their cost of funds and the quality of the loan. Most lenders will offer something between Prime + 1.5% and Prime + 2.75%. 7a's can also be based on the one month LIBOR rate.
Please note: the SBA does not make loans directly and interest rates are set by the lenders who make the loans.
504 Loan Rates
First Mortgage Rates: Currently range from the low 3% range to as much as 6.0% depending on loan size, term, property type and strength of transaction and are typically amortized for 20 to 25 years.
First mortgage rates and terms will vary depending on the type and size of the loan with the 5 year fixed rate/25 year amortization being the most popular. After the initial 5 years the loan could adjust as frequently as monthly or as infrequently as every 5 years depending on the lender.
Second Mortgage Rate: 4.15%* - fixed for 20 years.
The combination of the 2 loans and the fact that the second mortgage is always permanently fixed make for very attractive 504 loan terms.
SBA 504 Equipment Loans are typically 10 years and approximately 1% to 1.5% lower than commercial real estate transactions.
SBA 504 Refinance Rates may be slightly higher and "multi-purpose" property rates are lower than single or special use properties like hotelsor self storage properties.
New Fixed Rate Option for 504 First Mortgage
There is also a new low rate SBA fixed rate option available for multi-use properties for the first mortgage portion of the 504 program. The loan is fixed for the entire term of the 25 year first mortgage.
Currently the rate for this program is in the 5.5 to 6.0% range which when combined with the low rate second mortgage makes for very attractive fully fixed long term rates. (The rate for the first mortgage will vary depending on loan size, prepayment penalty, etc).
Again, this program is a true fixed rate that will never adjust, so while the rate may be higher than the 5 year fixed and other options, this loan is the better choice if you intend to own your property for the long haul. This a major opportunity for those seeking financing for a "multi-use" property.
Please contact us for more information about this program: 1-800-414-5285
504 Loan Payment Example
Here is an example of loan amounts and payments for a $1.5 million transaction with 10% down and a 1st mortgage rate of 5.0%:
Project Cost: $1,500,000
Down Payment/Equity Injection: $150,000
First Mortgage: $750,000
Second Mortgage: $600,000
The payments would be as follows:
First Mortgage: $4384.43
Second Mortgage: $3687.30
Total of Payments: $8071.73
The 504 offers a low monthly payment with the least cash out of pocket and it compares very favorably with most any other commercial loan program. It is available for purchase, refinance, construction or renovation of owner occupied (owner-user) commercial property.
More SBA 504 Loan info: 504 Loans
Please contact us at 1-800-414-5285 to find out how the SBA 504 or 7a could help your business.
* Rate includes fees to SBA, CDC and central servicing
agent. (Rates change monthly).