Mc Lean, VA (Vocus) April 14, 2009
NADCO, the trade association for the nation's Certified Development Companies (CDCs), reports that the interest rate for a 20-year SBA 504 loan has hit a record low for the projects funded in April 2009. This rate is the lowest it has been since the program's inception in 1986. The April debentures that funded this month’s SBA 504 loans were sold to investors at an interest rate of 4.31%. This low rate, coupled with the new fee reductions provided by the Congressional stimulus bill, led to an effective interest rate – including servicing fees – of only 5.25% for this month.
Chris Crawford, NADCO President, commented, "This is truly an historic opportunity for access to long term capital for small businesses right now. The low rate that the 504 debentures sold for this month is added to the stimulus bill fee reductions and the continuation of the elimination of the SBA’s borrower fee for this year. All these factors make the interest rate for SBA 504 loan the lowest it has ever been for small business borrowers. This is an incredible rate for a 20-year, fixed rate commercial loan with as low as a 10% down payment."
The Small Business Administration's (SBA) 504 loan program provides long-term, fixed rate financing for commercial real estate. Since its inception 504 has funded nearly $40 billion in loans to growing small businesses. The SBA's lending partners, Certified Development Companies (CDCs) are extremely busy working with small business borrowers who are taking advantage of these record low interest rates to purchase, build or expand their own facilities.
Added to the advantages of these low interest rates and fees, with some businesses closing their doors as a result of the recession, there are more and more commercial properties coming onto the market at very attractive prices. If a small business has been considering investing in a building, now is a great time to act. "NADCO was instrumental in convincing Congress to eliminate fees on SBA 504 loans as a way to provide new low cost opportunities for small businesses to invest in their own facilities. With these historical low rates, and no up-front fees, now is the time for business owners to consider expansion of their facilities. Our CDC members are working hard with our bank partners, and we have money available for sound business expansion projects," Crawford said.
Crawford went on to predict, "When I talk to CDCs and our bank partners around the country, I hear a good deal of unanimity on what will happen as borrower demand for fixed asset financing picks up this year. Small business borrowers and banks are going to turn to SBA 504 loans in record numbers for their long term financing when they start expanding again. There is just no better deal available for the purchase of real estate, or for expansion of existing facilities. I urge any business owner thinking about expanding to call their banker and ask about the SBA 504 program.”
About the National Association of Development Companies (NADCO):
Created in 1981, the National Association of Development Companies is the trade association for America’s Certified Development Companies (CDCs). Certified by the U.S. Small Business Administration, CDCs are community-based economic development organizations that serve their local communities and states, and are dedicated to the promotion of small business expansion and job creation through SBA’s 504 Loan Program. In addition to the 504 program, many CDCs also provide small businesses with access to other Federal, state and local economic development loan programs. These programs can provide both long and short term funding for borrowers.
Based in the suburbs of Washington, D.C., NADCO provides legislative and regulatory support for the 504 Loan Program on behalf of CDCs, the program’s lending partners (including first mortgage lenders, attorneys and others allied to the industry), and 504 small business borrowers. For more information, please call (703) 748-2575 or visit http://www.nadco.org.