December’s funding brings wonderful news for the 504 loan program – this month’s rates dropped significantly marking the largest rate decline in the program since February 2016. The 20 and 25 year SBA 504 debenture rates each declined 33 basis points. The result is a full-term fixed interest rate of 4.926% for the 20-year term and 4.990% for the 25-year term.
If you recall, on October 1st SBA announced a couple changes to SBA 504 loan fees – the overall effect being a reduction to the fees. There is a decrease to one of the ongoing monthly servicing fees paid to SBA – reduced from .642% to .368%. On the flip side, SBA reinstated the upfront guaranty fee charged on 504 loans, which is financed into the 504 loan. This fee had been eliminated years ago. It has went from zero back to its previous 50 basis points.
December is the first month showing this reduction to the ongoing servicing fees. For loans approved prior to October 1, 2018, funding in December, their full-term fixed interest rates are calculated using the prior set of servicing fees… still a great rate with the 20 year full-term fixed interest rate at 5.260% and the 25 year at 5.310%.
If you’re feeling left out in the cold on the 504 rates and fees and not quite understanding it all, please don’t freeze up, just pick up the phone and call us at 605-882-5115.
The FDDC team would like to extend warm wishes for a Merry Christmas and a Happy New Year to each of you. We sincerely appreciate working with you to assist South Dakota’s small businesses and look forward to partnering with you in the future.