Collateral / Interest Rates / Terms / Loan Fees
COLLATERAL
The lender will have a 1st lien on the project property/equipment and SBA will have a 2nd lien on the project property/equipment.
INTEREST RATES
Interest rates for the SBA 504 loan are fixed for the life of the loan.
TERMS
SBA 504 loans are for either 10 or 20 years. If a 20-year loan, the lender must have at least a 10-year term. If a 10-year loan, the lender must have at least a 7-year term.
LOAN FEES
There are one-time upfront loan fees, currently about 2% of the SBA loan amount, which are financed.
There is a one-time Third Party Lender fee, which is 0.5% of the Third Party Lender loan. This fee compensates SBA for the senior lender’s lien advantage. This fee may be passed onto the Borrower but may not be financed.
There are on-going servicing fees included in the total monthly payment amount of the SBA 504 Loan, currently about 1.5% of the SBA loan amount. These fees are part of the overall effective interest rates and recalculated every 5 years based on the outstanding principal balance.
| Project Costs | Source | Lien | Funding Limits | Rate | Term (Real Estate) | Term (Machinery/Equipment) |
|---|---|---|---|---|---|---|
| 50% | Lender | 1st | No limit | Market | 10 years or longer | 7 years or longer |
| 40% | MCFC / SBA 504 loan | 2nd | $50,000 to $5,000,000** | Fixed | 20 years | 10 years |
| 10%* | Borrower |
*This will be increased to 15% if you have a new business or a special purpose building, or to 20% if both apply.
**If you are a manufacturer or meet an energy goal, the loan limit may go as high as $5,500,000.