Collateral / Interest Rates / Terms / Loan Fees

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 for the SBA 504 loan are fixed for the life of the loan.

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.

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.