SBA 504 Loan Interest Rates at Historic Low
The U.S. Small Business Administration (SBA) has released the latest interest rates for the 504 Loan Program, and they are at historic lows.
The Small Business Assistance Corporation (SBAC) offers the SBA 504 loan program, which allows small business owners to finance or refinance commercial real estate and other fixed assets with low down payments and below-market, fixed interest rates fully amortized over 25 years. In March 2020, an SBA 25-year commercial real estate rate is 2.88%, while a 20-year rate is as low as 2.84%.
In a 504 loan, which can also be used for refinancing or to make improvements to a property, the business owner covers 10 percent of the total project costs, while the SBAC loans 40 percent and a partner bank covers the remaining 50 percent. The program also requires a lower down payment, allowing owners to inject 10 percent cash into a project instead of the normal 20-30 percent cash down payment required by conventional loans. Monthly payments are fixed for the life of the loan, enabling business owners the opportunity to control overhead costs and budget for the long term.
“These rates are incredible,” says Wendy Jeffers, Senior Lender at SBAC. “Most of our clients can buy a larger building for less than what they’re paying in rent because of the rate.” She considers the 504 Loan “the best-kept secret in real estate financing.”
For-profit, small businesses who plan to occupy the majority of their building generally qualify for 504 loans. SBAC offers 504 loans to eligible businesses located anywhere in the state of Georgia, as well as 3 counties in South Carolina.