The Small Business Administration’s (SBA) 504 loan program provides long-term, fixed-rate financing for owner-occupied commercial real estate and for the purchase of long-term capital assets. SBA 504 loans are designed to cover up to 40% of a project’s costs with a maximum of $5 million in funding; however, the Certified Development Companies (CDC) partners with a bank that provides 50% of the project financing and the borrower typically puts in 10% as a down payment. The rate on the SBA portion of the loan (the 40% piece) is fixed at 4% for 20 years for loans that were funded by the most recent SBA debenture in December 2012. This rate is the lowest recorded since the program’s inception. Below is a chart exhibiting the history of the SBA 504 rate over the past 24 months:
The SBA’s 504 loan program provides long-term, fixed-rate financing for small business owners nationwide. Since the program’s inception, 504 loans have funded over $62 billion in loans to over 130,000 small businesses. In turn, those small businesses have created or retained over 2.1 million jobs for the U.S. economy. CDCs continue to work with small business owners who are taking advantage of these record-low interest rates to purchase, build and expand their facilities or purchase capital-intensive machinery and/or equipment.