Can I Prepay My SBA 504 Loan?

Here is a wikipedia entry that has more in-depth information
https://en.wikipedia.org/wiki/SBA_504_Loan

SBA 504 loans used for the expansion or acquisition of real estate with a term of 20 years, at the same time as equipment loans generally have a term of 10 years. The SBA 504 loan has a low rate of interest, that's fixed for the term of the loan.

The maximum SBA 504 loan amount is $5.5 million. There is no maximum overall project fee. The SBA portion cannot exceed 40% of the eligible project costs.

The maximum SBA 504 loan amount is $5.5 million. There is no maximum overall project fee. The SBA portion cannot exceed 40% of the eligible project costs.

Fees involved with SBA 504 loan; SBA fees, approximately 2.5% of SBA portion of the loan and secondly the lender fees, negotiated with the lender, but usually 1-2% on lender loan.

The SBA 504 loan gives economic development funding that is intended to encourage private sector investment in fixed assets, the consequences of which will increase productivity and creates new jobs. The local tax base is likewise improved through adding property on which taxes are primarily based. The SBA 504 loan program offers long-term, low down payment, fairly priced fixed rate financing to healthy and expanding organizations that have the possibility of creating new jobs.

Every bank will set their own rate; however, here are some guidelines from the Small Business Administration.

Regarding SBA 7a loan, 7a is NY Prime rate 2.75% maximum. As for SBA 504 loan, a borrower's rate on the 504 part of the loan is set when the assignment is completed and a debenture is sold on Wall Street. Presently the rate is fixed for the time period of the loan. The rate tracks the ten 10-year treasury.

With low down payments and low, fixed, long term interest rates, the SBA 504 loan allows businesses retain working capital. It eliminates the uncertainty associated with refinancing and balloon payments, enabling long-term planning and business enterprise expansion. For lenders, the loan gives lower risk through shared financing, a low loan-to-value ratio and the capability to earn CRA credit.

Collateral taken to acquire the SBA 504 loan usually consists of a second mortgage at the land and property or a second lien on the equipment that is financed.

The Small business Administration 504 Loan program offers benefits to smaller businesses. The advantages include low lower payment (permitting the small company to preserve capital), longer terms, and bigger loans than might be available via a conventional loan.