Small Business Lending Insider

July 2019
Latest Rates

Base
Rate
Standard
Effective
Refinance
Effective

Effective
SBA 504 10-yr 2.24% 3.94% 3.98% July 2019
SBA 504 20-yr 2.53% 3.91% 3.95% July 2019
SBA 504 25-yr 2.69% 4.01% 4.04% July 2019
SEDA-COG PIDA 3.00% N/A N/A Through Sept. 2019
SEDA-COG RLF 4.25% N/A N/A Through Sept. 2019
Another Record Month for 504 Rates

The interest rate for the 20 and 25-year SBA 504 loans hit another historic low for the month of July.  The effective fixed rate for a 20-year loan fell to 3.91%, while the fixed rate for a 25-year loan fell to 4.01%.  The continued downward pressure on Treasury Rates has allowed for these attractive interest rates to small businesses.  Not to be overlooked, the interest rate for refinancing is also experiencing record lows, with a 20 or 25-year 504 loan around 4%.

SBA 504 loans can be used for owner-occupied commercial real estate projects - land and building purchase, renovations, and new construction.  The 10-year 504 loan can be used to acquire production equipment.  Small businesses may also potentially use a 504 loan to refinance their commercial and/or equipment debt.

For more information on SBA 504 financing through SEDA-COG, visit www.sedacogldc.org.

Possible Changes to SBA 504 Program
While still in the committee stage in the U.S. Senate, members of the Senate Small Business Committee have introduced the Strengthening Investment to Grow Manufacturing in America Act, "SIGMA".  This bill is specifically designed to support and accelerate the start-up and expansion of small manufacturers throughout the United States.

Initial provisions included in SIGMA that would improve the SBA 504 loan program for small manufacturers are:
  • Increase the maximum 504 loan amount from $5.5 million to $10 million;
  • Allow for a 5% borrower injection (current minimum is 10%) unless project involves both a start-up and limited use building, in which case it would be 10%;
  • Allow for 51% occupancy for acquisition of existing building and new construction (currently 51% occupancy only applies to acquisition, with higher requirements for new construction);
  • 1/$150,000 job creation and retention requirement (currently 1/$120,000 for small manufacturers);
  • Establishing a 504 Express Loan for loans under $500,000; and
  • Consolidating the closing process and improving oversight of the program.
Again, it is unknown at this time whether SIGMA and any of its specific provisions will pass the Senate and the House and be signed by the President.  But it appears that members of Congress on both sides of the aisle are in favor of improving assistance to small businesses.

SEDA-COG will provide updates as this bill moves through Congress.

State PIDA Rates
The PA Department of Community and Economic Development (DCED) announced the latest rates for their PIDA loan program effective July 1st.  These rates are good for applications received by September 30th.

For Real estate loans financing eligible land and building costs, borrowers will have the following interest rate options:

For term loans with a regular amortization:
  1. Fixed interest rate for the full term of the loan (up to a 15-yr. period), set at the current 10-year treasury yield + 100 basis points.  Based on the current 10-year treasury yield, the fixed rate option is 3.00% for the life of the loan.
  2. Fixed interest rate for a seven (7) year period set at the 10-year treasury yield.  After seven years, the rate will reset to the then-current 10-year treasury yield.  Please note, the reset rate is limited to a 200 basis point increase/decrease.  The reset rate is then fixed for the duration of the loan.  Based on the current 10-year treasury yield, the rate for the initial (7) year period is 2.00%. 
For 10-year term loans with a 20-year amortization period:
  1. Fixed interest rate for the full term of the loan (10-yr. period). This option is calculated using the 10-year treasury yield +100 basis points.  Based on the current 10-year treasury yield, the fixed rate option is 3.00% for the life of the loan.
  2. Fixed interest rate for a five (5) year period set at the 10-year treasury yield.  After five years, the rate will reset to the then-current 10-year treasury yield.  Please note, the reset rate is limited to a 200 basis point increase/decrease.  The reset rate is then fixed for the duration of the loan.  Based on the current 10-year treasury yield, the rate for the initial (5) year period is 2.00%. 
For Equipment loans - 3.00% fixed rate for the full term of the loan. 

Visit www.seda-cog.org/finance for more information.

About Us

SEDA-COG's Business Finance Department serves the entire state of Pennsylvania and  rural counties in Maryland and West Virginia  for the   SBA 504 Program .
 
For PIDA and SEDA-COG loans, we cover  an 11-county area in central Pennsylvania including Centre, Clinton, Columbia, Juniata, Lycoming, Mifflin, Montour, Northumberland, Perry, Snyder, and Union counties.

For more information -  www.seda-cog.org/finance or www.sedacogldc.org

Senior Relationship Manager II
P: 570-524-4491
C: 570-850-0195
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