SBA 504 Rates for the Current Month
The SBA 504 loan rate (effective rate) for 20 year commercial real estate loans is 4.462%* The "effective rate" is inclusive of all servicing fees.
The 504 program consists of 2 loans:
- first mortgage for 50% of the project cost
- 504 second mortgage guaranteed by the SBA
New Fixed Rate Option for 504 First Mortgage
There is a new low rate SBA fixed rate option available for multi-use properties with the 504 program. The loan is fixed for the entire term of the 25 year first mortgage.
The majority of all 504 loans have an initial fixed rate that becomes variable at some point in the future - usually after 5 years, but this is a true fixed rate that will never adjust.
Please contact us for more information about this new program: 1-800-414-5285
504 Loan Rates
First Mortgage Rates: Currently range from approx 4.5 to 6.5% depending on loan size, term, property type and strength of transaction and are typically amortized for 20 to 25 years. (Multi-purpose property rates are lower than single or special use properties like hotels or self storage properties).
504 Second Mortgage Rate: 4.462%* - fixed for 20 years.
SBA 504 Equipment Loans are typically 10 years and approximately 1% to 1.5% lower than commercial real estate transactions.
First mortgage rates can vary depending on the type and size of the loan, but the most popular type is the 5 year fixed rate which will typically be in the 4.5% to 6.5%. It is fixed for 5 years at the start rate, re-indexed each 5 years thereafter and is typically fully amortized over 20 to 25 years.
The second mortgage is a 20 year fixed rate.
The combination of the 2 loans - which are both fully amortized long term - and the fact that the second mortgage is permanently fixed make for for very attractive 504 loan terms.
SBA 504 Refinance Rates for new SBA Temporary Refinancing Program are slightly higher at 4.665% this month.
SBA 7a Rates
SBA 7a loan rates are simpler as they are typically Prime + a margin not to exceed 2.75%, although some lenders are starting to offer attractive 5 year fixed rates. 7a's can also be pegged to the one month LIBOR rate.
The margin for the 7a loan is set by the lender based on their cost of funds and the quality of the loan.
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 5.5%:
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: $4605.65
Second Mortgage: $3783.60
Total of Payments: $8389.25
The 504 offers a very low payment with the least cash out of pocket and it compares very favorably with any other commercial loan program. It is available for purchase, refinance 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 our expertise with the SBA 504 can help your business.
* Rate includes fees to SBA, CDC and central servicing
agent. (Rates change monthly).
