Rates, Terms and Fees
The maturity on any 504 loan is either 10 or 20 years, depending
on the useful life of the assets. If a 504 loan has a maturity of
20 years, the participating lender's portion of the debt is required
to have a maturity of at least 10 years. If the 504 loan has a maturity
of 10 years, the participating lender's portion of the debt must
have a maturity of at least 7 years.
The rate on the SBA portion is set when the CDC sells the bond
(debenture) to fund your loan. The rate is then fixed for the term
of the loan. 504 loans are amortized securities. For a historical
reference on debenture pricing you may contact the MADCO office.
When the loan closes, your monthly payment will include servicing
fees based on the declining balance of the SBA 504 loan: 0.625%
to CDC; 0.368% to SBA; 0.100% to central servicing agent.
The fees on the SBA 504 loan portion are approximately 2.75 percent.
All of the fees on the 504 loan are added to the loan amount so
that you can amortize their cost over the term of the loan.
There is a prepayment penalty for the first half of the loan term
on the SBA 504 loan. Payments on the SBA 504 loan are made by ACH
debit to the borrowers designated checking account on the first
of each month after the loan closes. Payments on the 504 loan are
separate from your payments on the 50 percent first mortgage loan.