SBA 504 Loan Interest Rate Drops Below 5% for Small Business Borrowers

MCLEAN, Va., Aug. 11 /PRNewswire-USNewswire/ --The Small Business Administration's (SBA) 504 loan program is providing long-term, fixed rate financing for the purchase of commercial real estate at one of the lowest interest rates since the program's inception. The SBA's lending partners, Certified Development Companies (CDCs) are busy working with small business borrowers who are taking advantage of this current low interest rate to purchase or build new facilities.

NADCO, the trade association for the nation's Certified Development Companies (CDCs), reports that the interest rate for a 20-year SBA 504 loan continued to fall to a low of 4.93% this month. The August bond sale to investors that funded SBA loans was sold at a rate of 3.52%. This low sale price resulted in an effective interest rate – including fees – of only 4.93% for borrowers this month. This interest rate is one of the lowest since the program began in 1986.

The Small Business Administration's (SBA) 504 loan program provides long-term, fixed rate financing for commercial real estate, and has funded nearly $60 billion in loans to growing small businesses over the past 24 years.  Not only are the interest rates low right now, but one best aspects of an SBA 504 loan is the low down payment required by a borrower.  The down payment is typically only 10%.   CDCs across the country are busy helping small business borrowers who are taking advantage of these record low interest rates to purchase, build or expand their own facilities.

Recent loan data has shown that a large percentage of SBA 504 borrowers are professional practices.  The greatest concentration of loans has been to physicians, dentists, veterinarians, lawyers and accountants.   Chris Crawford, NADCO President, observed,  "It's not surprising that accountants and lawyers recognize the benefits of SBA 504 loans, but it's gratifying to see so many professionals also realizing that owning their own building to fix their business occupancy costs is a very savvy financial move.  More business owners would be wise to make similar investments."

Jean Wojtowicz, Chair of the NADCO board and Executive Director of Indiana Statewide Certified Development Company, observed that " a commercial loan below 5% is an incredible rate for 20-year, fixed-rate money.  When you consider the drop in the price of commercial real estate and the inventory currently on the market, small businesses have a real opportunity to expand or buy their first building right now."  

Chris Crawford went on to say, "There is just no better deal available for the purchase of real estate or for expansion of existing facilities. I urge any business owner thinking about expanding to call their banker and ask about the SBA 504 program today. Our CDC members are working hard with our bank partners, and we have money available for sound, small business real estate projects," Crawford said

About the National Association of Development Companies (NADCO):

Created in 1981, the National Association of Development Companies is the trade association for America's Certified Development Companies (CDCs). Certified by the U.S. Small Business Administration, CDCs are community-based economic development organizations that serve their local communities and states, and are dedicated to the promotion of small business expansion and job creation through SBA's 504 Loan Program. In addition to the 504 program, many CDCs also provide small businesses with access to other Federal, state and local economic development loan programs. These programs provide both long and short term funding for borrowers.

Based in the suburbs of Washington, D.C., NADCO provides legislative and regulatory support for the 504 Loan Program on behalf of CDCs, the program's lending partners (including first mortgage lenders, attorneys and others allied to the industry), and 504 small business borrowers. For more information, please call (703) 748-2575 or visit www.nadco.org.

SOURCE National Association of Development Companies (NADCO)