The equation for the penalty is: Penalty = D (I x P), where D = the remaining principal balance of the 504 loan. What are debenture soft costs?A. The SBA 504 fees should not be included in this figure but will be added to your loan amount. A CDC may charge anywhere from 0.625% to 1.000% servicing fee on its 504 loans. The 10-year effective interest rate for standard 504 loans is 2.468% and 2.520% for refinance loans (set bimonthly) with the new fee calculation. These fees are added to the loan amount and amortized over the loan. By using this website, you agree to our use of cookies, our Terms of Use and our Privacy Policy. We use cookies to provide you with a great experience and to help our website run effectively. * Wells Fargo N.A. If you need to visit the SBA directly please click here: It also connects businesses with third party lenders that can assist in providing SBA-backed and other loans. Low fees; Government backed; Value; Own instead of lease; Competitive interest rates; Fixed rate; Flexibility; One of the lesser known loan programs by the SBA, 504 loans are composed of two loans: a conventional bank loan for 50% or more of the loan amount and a loan from CDC (Certified Development Company) for up to 40%. **The Underwriters fee is a function of the gross debenture amount and is calculated in the following manner. The default figures shown are hypothetical and may not be applicable to your individual situation. SAMPLE PROJECTS FINANCED BY 504 n Office Buildings (Condos) n Dentists n Printing/Copying n Franchises n Restaurants n Suppliers/Wholesalers n Child/Adult/Pet Daycare n Manufacturers n Hotels/Motels n Medical Facilities Animal Hospitals Subtotal of SBA fees as listed above, plus net debenture amount; this summation is divided by 0.996; round this number up to the next highest thousand; multiply number by 0.004. Currently, SBA 504 loan interest rates are 4.66% for a 20-year loan and 4.49% for a 10-year loan. Loan Calculator . An SBA 504 guaranteed real estate loan with a fully amortizing 20 year fixed rate period as of today is the 10 year treasury rate which is 2.12% plus the fixed rate of .48% plus ongoing annual fees of 1.7% for an all in rate of 4.3%. SBA504.LOANS 7601 N Federal Hwy. All users should perform their own due diligence and research, especially if they are connected with a third-party lender. Fees associated with an SBA 504 loan are added to the loan amount allowing you to amortize their cost over the term of the loan. Rounded to the next highest thousand (refunded to Borrower). Your interest rate will be the sum of those fees, plus the bond rate that applies to your loan. We are not the Small Business Administration and are not a lender. We have no affiliation with any government agency. See a CMDC loan officer for more information. We are not the Small Business Administration and are not a lender. Click here if you need to visit OTHER FEES n After approval, SBA requires the lender to pay a 0.50% lender fee on the first lien amount. This website is owned by a private company that offers business advice, information and other services related to the formation, financing, operation, and management of businesses. Costs for SBA 504 Loans. The fees are based on 40% of the project cost. This website is not an agent, representative or broker of any lender and does not endorse or charge you for any service or product. (Note: If you’re charging 0.625%, it might make sense to charge 1.000% on your new loans. Job Creation - The maximum SBA debenture is $5 million for meeting the job creation criteria or a community development goal. Each month, the Small Business Administration (SBA) announces an updated set of rates for the SBA 504 Loan Program. This too is negotiable. 90% financing generally does not require additional collateral. This is a reduction of 0.0475% from FY2019. Prepayment Premiums: Penalties for paying off your loan early, reducing over time (only due if you pay off the loan early). The table below illustrates the typical fee structure associated with a $1 million project and a $400,000 net debenture. When your loan closes your monthly payment will include servicing fees based on the declining balance of the SBA 504 loan. None of the information on this site constitutes legal advice. If you are considering getting a 504 loan from the Small Business Administration (SBA), you might have questions about closing costs and other fees. As we mentioned before, business owners are required to make a down payment of between 10% and 20%, depending on the type of project and time in business. FRANCHISE FEES ARE INELIGIBLE UNDER THE SBA 504 PROGRAM. *Bank rate: Estimated – will vary depending on lender. Borrower is responsible for all closing costs associated with the SBA closing, including, but not limited to, recording fees, title company closing fee, title insurance (reissue) and borrower attorney's opinion letter. The annual service fee is reduced to 0.3205% plus 0.0015%, for a total of 0.3220% (32.05 basis points plus 0.15 basis points) of the outstanding balance of the loan. You’ll find a number of processing fees, such as a funding fee, a CDC processing fee, … Why choose an SBA 504: The goal of the SBA 504 program is to create and retain jobs through long-term financing of real estate and equipment at a fixed, below-market interest rate. is an independently owned and operated website and has no government affiliation. This website is independently owned and operated and has no government affiliation. You also understand that we are not affiliated with the Small Business Administration (SBA). SBA 504 Interest Rates, Fees, and Loan Amounts Maximum loan amounts are determined by how funds will be used based on which goal they support from the list below. Unlike other SBA loans, the SBA 504 loan program offers lower up-front fees and fixed interest rates, a huge bonus given the recent trend of rising interest rates. Total 504 projects costs for a $1,000,000 project may include the following (eligibility requirements apply to the 504 portion of the project as well as the participating lending portion): Building Purchase; Land; Renovation; Furniture and Equipment; Soft Costs; TOTAL $1,000,000; Loan Structure They are not out of pocket. However, all of these fees are rolled into the loan in order to limit your upfront cash contribution requirements. The premiums decline over the life of the loan and are eliminated entirely half way through the loan term. Businesses often have difficulty qualifying for traditional financing due to required down payments of 20 percent or more. Just like the myths that SBA 504 loans have too much paperwork and take too long to process, you have probably heard that 504 loans have too many fees. The package authorizes $2 billion for the SBA’s 7(a), 504 and Microloan programs, while allowing the agency to waive borrower and lender fees, according to legislative summaries of the law. Yes, there is an origination fee on a SBA 504 Loan. SBA 504 loans are subject to a prepayment premium. Servicing Fees: Fees charged by the loan servicer over time, reducing in five-year increments. When you get an SBA 504 loan, you can expect to save on costs. Additional Fees: A number of other fees may be charged during this process, including recording fees, closing fees assessed by the title company, title insurance fees, attorney’s fees, and more. Nothing on this website is an offer or a solicitation for a loan. Servicing fees are reduced at five-year intervals based on the loan balance at each interval. If loan fees are charged by the bank, they can be included as project costs to be financed. Simply fill out the form below for a risk-free consultation and a free SBA loan quote! Are there any origination fees associated with the SBA 504 Loan Program?A. The U.S. Small Business Administration's SBA 504 Loan or Certified Development Company program is designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates. SBA 504 Loan Calculator Project Name; Land (Land and Existing Building) Building (Land and New Construction) Machinery/Equipment; Professional Fees (Architect/Engineering) Contingency (10% of Construction Costs) Interest on Interim Loan; Other Expenses; TOTAL PROJECT COSTS; Lender Interest Rate; CDC Interest Rate; Are You a Start-Up Business? Pay a lender Business Investment Act of 1958 participated in predecessor programs have been grandfathered the. 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