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 Small Business Lender & Funding 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.