What Is the Current Interest Rate for SBA 504 Loans (September 2022)?

The short story: The current interest rate on SBA 504 loans is 5.44 percent on the 25-year, 5.34 percent on the 20-year, and 5.33 percent on the 10-year.

Note that this rate is fixed for the entire duration of the loan and there are prepayment penalties. Note also that each month, a new rate is determined on the open market. These loans are structured as bonds, or debentures, whose rates are determined in an auction, just like a bond.

Investors bid on the debentures and the rates are set based on the price they pay.

The SBA 504 Loan Program offers small businesses long-term, fixed-rate financing used to acquire fixed assets for expansion or modernization. The program is administered by the U.S. Small Business Administration (SBA) and provides participating lenders with a partial guarantee of the loan. As of September 2022, the current interest rate for SBA 504 loans is 5.44 percent for the 25-year term. 

These loans are the CDC portion of an SBA 504 loan package. Remember, 50 percent of the total financing is through a loan with a bank or other financial institution. Ten percent must be put up by the borrower. It is this remaining 40 percent, funded through a CDC, or Certified Development Company, and guaranteed by the SBA, that is dependent on the rate set by the market for the debenture sold.

A few more facts:

SBA 504 Debenture Pricing: The first Thursday of the first full week of the month (beginning and including a Sunday). This is the date the debenture (on the CDC portion of the financing) is sold. It is on this date that the interest rate for your SBA 504 loan is set. Remember, the loan you took out with your bank or credit union, as part of an SBA 504 loan, has its own interest rate, which could be higher or lower than the CDC portion. Your bank loan could also be fixed or variable.

It all depends on what you negotiated with your financial institution.

The Funding Date: The Wednesday of the week following Pricing Date. This is the date you will get your funding on the SBA-guaranteed portion of your loan package.

In conclusion, the SBA 504 loan program still offers small business owners low interest rates on long-term loans. This makes it an attractive option for those looking to finance their business. If you are considering an SBA504 loan, be sure to compare rates and terms from multiple lenders to get the best deal on your total loan package.

It’s important to have an experienced commercial loan advisor on hand to ask any questions you may have about SBA 504 loans.

If you’re interested, you can see the historical interest rates for SBA 504 loans here.