Welcome back, everyone! Today, we're diving into the latest updates on SBA 504 loan rates for December 2024. These loans are crucial for business owners looking to finance commercial real estate and other significant business expenses at favorable rates. Let's explore everything you need to know about the current rates, loan structures, and exciting opportunities available through SBA 504 loans.
Current SBA 504 Loan Rates
In December, the 25-year debenture rate for SBA 504 loans has decreased to 6.093%, down from 6.283% in November. This drop is a positive development for those involved in commercial real estate deals, as the majority of these transactions utilize the 25-year debenture rate.
SBA 504 Loan Structure
The SBA 504 loan is structured as two separate loans. The first is a senior loan from a bank, and the second is an SBA-guaranteed loan with a 10-year declining prepayment penalty. Banks typically offer terms ranging from 5 to 33 years, with options for interest-only periods during construction deals.
504 Green Program
The 504 Green Program is an excellent option for those looking to maximize their financing. It offers up to $5.5 million in SBA-guaranteed proceeds, allowing for deals as large as $22 million, depending on the bank's senior lien capacity. This program also increases the aggregate SBA lending cap to $16.5 million.
Process and Timeline
SBA 504 loans involve two underwriting processes. After construction, the debenture is funded and sold into the secondary market approximately 30 days after the certificate of occupancy is issued. This timeline ensures that borrowers can efficiently access the funds they need.
Comparison with SBA 7(a) Loans
When deciding between SBA 504 and 7(a) loans, it's essential to consider the specific needs of your project. SBA 7(a) loans offer flexibility with variable rates tied to the Wall Street Journal Prime, plus a margin. Fixed-rate options are also available for both real estate and non-real estate deals.
Use Cases for SBA Financing
SBA financing is versatile, making it suitable for franchise startups, expansions, rollups, and more. Rollups, such as acquiring competitors in the same industry, can be financed up to 100% with 7(a) loans. Understanding how to leverage these programs can significantly benefit your business.
Additional Resources
For those interested in business acquisition, avoid generic marketplaces like BizBuySell. Instead, visit Business Ownership Academy for customized searches and weekly inventory updates. This resource offers expert insights into SBA financing, creative business acquisition, franchise investing, and more.
Call to Action
If you're ready to explore personalized financing advice, schedule a consultation at Beau Eckstein's website. For ongoing insights, subscribe to the channel and join the Business Ownership Newsletter for the latest updates on SBA financing, business acquisitions, and franchising.
Expert Insights
With over 20 years of lending experience, Beau Eckstein emphasizes the versatility of government-guaranteed programs like SBA 504, 7(a), and USDA B&I loans. These programs offer strategic opportunities for business growth and expansion.
Engagement and Networking
Engage with the community through Q&A sessions and subscriptions to stay updated on financing trends and strategies. Whether you're exploring SBA financing or seeking advice on business acquisitions, the resources and expertise available can guide you toward success.
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