SBA 504 – 25 Year Debenture Debuts

25Year300

Announced in April, today was the first sale of 25 year debentures (bonds) to fund SBA 504 projects. With the addition of the twenty-five year offering, the SBA 504 program has expanded…with terms from ten to twenty-five years, options for refinance, all at or below market with fixed interest rates.

A reminder of the details…

  • The term of the participating lender accompanying a 25 year 504 loan must be at least 10 years.
  • The fee structure is the same as for 20 year loans and debentures.
  • The voluntary prepayment penalty schedule will stay at 10 years for the 25 year 504 loans.
  • The interest rate is expected to be slightly higher than the 20 year rate, and will be set based on market demand and pricing at the time of funding.

The 25 year option for SBA 504 will provide small business borrowers with more choice in financing their long term capital projects, providing a longer repayment term and lower monthly loan payments.