We are going to break down the current SBA loan rates, into two categories, 1. on SBA 7a loans and 2. on SBA 504 loans. Both are very different so we will describe what the current rates are separately, and give a brief description of the programs themselves.
SBA Loan Rates on 7a Loans
The vast majority of banks tie their 7a loans to Prime Rate, which is currently at 3.25%. The banks margin is normally 2.75%, so the Effective Rate for the borrower is currently at 6%. It is very uncommon in this market for a bank to offer an effective rate less than 6%. Most banks are reluctant to lend, so if they do they are currently maxing out their margin.
Also, the SBA 7a loan, is used for the purchase or refinance of commercial real estate, business goodwill, equipment, debt consolidation (limited) and working capital. The loan is almost always amortized over 25 years and the rate floats with Prime, adjusting quarterly. Prepayment penalty is 5% year one, 3% year 2, 1% year 3, gone thereafter. Loan amounts can go up to $5,000,000.
SBA Loan Rates on 504 Loans
The SBA 504 loan, has two different loans and therefore 2 different rates. The first lien position loan is a conventional bank loan, so its terms and rates vary from one lender to the next. By the most common loan would be a 5 year fixed on either a 20 or 25 year amortization schedule. For example, our 504 loans are tied to the LIBOR 5 Year Swap, which is currently at 2.15%. The margin depends on the financial strength of the borrower as well as the loan size, but the Effective Rate is currently between 5.8% and 6.2%, on a 25 year amortization schedule. Theses loan also come in a 1, 3 or 10 year fixed rates, on a 15, 20 or 25 year amortization schedules.
The second lien loan is the SBA loan also referred to as the CDC loan, it???s a 20 year fixed loan on a 20 year amortization schedule. The current debenture rate is 5.79%.
Go here to see the most updated commercial loan rates, including the 504 debenture rates, conventional commercial mortgage and SBA 7a loan rates.