October 2024 SBA 504 Interest Rates
25 Year Term 6.03%
20 Year Term 6.10%
10 Year Term 5.82%
The October 2024 SBA 504 debenture pricing was completed on October 10, 2024. The SBA offers a 504 Loan with a 25-year maturity for the acquisition of owner-occupied commercial real estate and related costs. This is in addition to the 10 and 20 year loans currently available in the 504 Loan Program. Loans are typically eligible for up to 90% financing of project costs. Rates include monthly servicing fees to CDC, SBA, and central servicing agent; based on SBA FY25 fees. SBA 504 refi rates are approximately 3 basis points higher than debenture pricing noted above.
To celebrate Hispanic Heritage Month, SomerCor hosted Congresswoman Delia Ramirez and SBA Regional Administrator, Geri Aglipay, at the headquarters of our SBA 504 client, Osorio Metals Supply, Inc.
Ruben Osorio, a Mexican immigrant, started Osorio Metals as a one-person operation in his home garage in 1992. After continued success, Osorio Metals increased its operations by renovating and modernizing its manufacturing facility in Chicago through the help of SomerCor and the SBA 504 loan program. It is now a second-generation family business that is not only growing, but also helping other metal fabricators in the neighborhood.
“The SBA 504 loan was absolutely vital to the trajectory of our five-year growth plan,” said Osorio Metals Chief Operating Officer, Adriana Osorio. “We needed to transform our facility to expand our family business. It would not have been possible without the SBA 504 program and SomerCor’s guidance.”
Read the full press release about the event here.
SBA Expands 504 Debt Refi Program
The SBA 504 refinance program helps small and mid-size businesses take advantage of lower interest rates and access equity for working capital.
Effective November 15, 2024, the Small Business Administration (SBA) improves the SBA 504 Refinance program to streamline the loan process and expand borrower eligibility (Direct Final Rule 89 FR 79734).
Key Changes to the SBA 504 Debt Refinance Without Expansion:
- Removes the 50% cap on debt refinance without expansion – this corrects a drafting omission in SBA’s Final Rule released on October 12, 2023;
- Raises the loan to value requirement to 90% on debt refinancing without expansion that includes other business expenses and eliminates the cap on Eligible Business Expenses;
- Allows certain “other secured debt” to be included as an Eligible Business Expense in 504 debt refinancing without expansion – “Other secured debt” is debt incurred prior to the 504 loan application that has been secured by the same eligible fixed assets and incurred for the benefit of the borrower and/or operating company.
Key Change to the SBA 504 Debt Refinance With Expansion:
- Aligns the “substantially all” standard for 504 debt refinancing with expansion to be consistent with 504 debt refinancing without expansion standard of 75%.
For both refinance with and without expansion, the SBA also revised the 10% substantial benefit test when refinancing government debt. Per SBA Procedural Notice 5000-857295, substantial benefit will mean that the new install amount attributable to the debt being refinanced must be less than the existing installment amount. This change provides flexibility to allow a payment improvement to meet the requirement and expands borrower access.
