January 2009 UPDATE  

Interest Rate Update: SBA 504 Program February Debenture Rate Drops 100 Basis Points

A sign that some improvements may be coming to the beleaguered credit markets came to light in the February SBA 504 20-year debenture funding rate that was announced Wednesday.  Credit spreads for the monthly bond issue tightened by 40% compared to the previous month, which drove the all-in 20-year fixed rate for the debenture to 5.70%, the lowest SBA 504 20-year rate since June 2003!

SBA 504 20-year debentures provide subordinate fixed rate financing to almost all for- profit businesses taking on real estate acquisition or improvement projects.  Eligible businesses are those with a tangible net worth <$8.5 million and an average annual net income <$3 million.
 
Because the loans are subordinate in collateral position to primary bank financing, the first mortgage lender is usually secured at a 50% loan to value on the real estate asset, with the SBA 504 program commonly providing financing up to the 90% loan to value level on the same asset. As a result, company cash that would normally be required for conventional financing can be preserved and used for working capital or other project purposes.
 
SBA 504 loans on a 20-year basis for real estate projects are issued monthly, while SBA 504 loans on a 10-year basis for equipment are issued every other month. 

Please visit www.edcfinancecorp.com for more information on the SBA 504 program and other resources offered by EDC Finance Corporation.

Other Issues

2011

• August (Loan rates drop & SBA e-504)

2010

• February (RZFBP)
• January (SBA 504 Fee Elimination)

2009

• December (PIDA)
• September (SBA 504 Debenture)
• August (PIDA Expansion)
• July (FIF & Benchmark Interest Rate)
• June (SBF & FIF Changes)
• May (Energy Programs)
• March (Bankers' Update)
• January (SBA Update)
• January (SBA 504)