June 17, 2019
Main Street Monday – 25-Year Fixed Rate SBA 504 Loans Hit $1 Billion Milestone in First Year
By Bob Coleman
Editor, Main Street Monday
As the first year since the kick-off of the 25-year SBA 504 loan program comes to an end, it hits a milestone of over $1 billion in fundings, according to the National Association of Development Companies (NADCO).
A welcome longer-term fixed asset funding solution for small businesses, in addition to banks and investors, the 25-year SBA 504 loan program reflects a face value of $1.04 billion in total lending dollars to date.
The lending program marked its first funding in July of 2018 and in its final month of the first-year launch, June 2019 figures indicate a total of 1,289 fixed-rate 504 loans to small businesses throughout the country.
Spread over the longer 25-year term, borrowers in June took advantage of the lowest-ever interest rate of 4.09%. Over the course of the last year, the average effective rate* was approximately 4.96% on average, or just 9 basis points above the 20-year fixed effective rate 504 loan program. Currently, the 504 loan 20-year program is funding at a historically low rate of 3.983%.
The SBA 504 loan program offers 10, 20 or 25-year fixed rate lending solutions for commercial fixed asset funding for small business project costs ranging from $100,000 to $15,000,000.
*Effective rate assumes a CDC fee of 0.625% and then-current fiscal year borrower fee.