SBA 504 Loan Pricing

SBA 504 loans have a slightly different structure to them than most people realize. When you apply for one of these loans you will have two loans when the deal funds. One loan to the bank, and another to the SBA. The bank will typically fund 50% of the total project and SBA will fund 30-40% of the total project leaving the borrower to put a 10%-20% down payment.

The SBA portion of the loan will have a fixed interest rate. This rate is driven by what the loan debentures sell for in the secondary market. Currently the SBA rate is below 5% fixed for 25 years. This makes the SBA 504 loan program so attractive.

The bank portion of the loan can range significantly depending on the lender. Some lenders interest rate pricing is really high due to the banks cost of funds. I had a community bank price the bank portion of their 504 loan at 7% fixed for 5 years. Our wholesale relationship is currently pricing their bank portion of the loan at about 5.35% fixed for 5 years. There is a large gap of interest rate pricing between competitors.

The SBA 504 Loan Program is an excellent way to borrow money for a long time at a cheap rate. Let us make sure you get the best bank deal available. This is where we earn our money as your consultant.

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