Borrowers who take advantage of the SBA 504 Loan Program for commercial property or capital equipment purchase get access to long-term, fixed-rate interest rate financing not available with conventional lenders. The SBA uses the 10-year Treasury Bond rate as the index when pricing 504 loans. Using this index now means that 504 loans are cheap compared to the Prime Rate. While the Prime Rate has climbed to 5.5%, both the 20- and 25-year 504 loans are currently funding at 75bps below Prime, with an ongoing effective rate of 4.59% for the 20-year loan and 4.74% for the 25-year loan. This cost advantage locks in years of savings for an owner-occupied borrower, which means now is a perfect time to purchase or refinance with an SBA 504 loan.
In 2018, the U.S. Small Business Administration approved 35 SBA 504 loans submitted by HCDC. Of these approvals, five went to majority women-owned businesses, three went to minority male-owned businesses, five went to minority women-owned businesses, and two went to veteran-owned businesses. These 15 loan approvals represent 43% of the HCDC SBA 504 approvals in 2018.