SBA 504 loans are for terms of either 10 or 20 years. The interest rate on the SBA 504 loan is set when the SBA sells the bond (debenture) to fund the loan, and the interest rate is then fixed for the duration of the term. The small business owner's monthly payment includes program fees and a loan loss subsidy fee which are financed as part of the loan. SBA 504 debentures are fully amortized securities and have no baloon payments. To compare interest rates, see the U.S. Treasury bond rates. Contact Manhattan Merchant Services today to find out about current SBA 504 Rates along with historical interest rates.

Note: There is a penalty for prepayment during the first half of the loan term on an SBA 504 loan.

Collateral

The SBA takes a subordinate (second mortgage) to secure its 40% portion of the financing and takes a security interest in assets financed. Other assets of the business or principals are generally not required. (unless the company is a startup or the credit is unusually risky or the asset being financed is considered a single purpose asset or doesn't appraise high enough).

Fees and Payments

All of the fees on an SBA 504 loan are added to the loan amount so they are amortized over the loan term and do not represent any "out of pocket" expenses for the small business owner.

Payments on the SBA 504 loan are made by ACH debit from the small business owner's designated checking account on the first of each month after the loan closes. Payments on the SBA 504 loan are separate from payments on the 50% first mortgage loan.

Contact Manhattan Merchant Services today to see how we can help you grow your business by implementing the 504 Loan

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