(Blended) Fixed Rates In High 4’s to Low 5’s Now Available
Most people who research the SBA 504 loan program for commercial real estate understand that it is heavily advertised as “fixed rate” financing. This is both true and false, but it is more true now than ever before…at least for a while.
The SBA 504 program consists of a first and second mortgage. The 2nd mortgage is always fixed at a “below market” rate and it is primarily what makes the program so attractive. (See below for current rates as of the date of this post).
The 7a program is the other SBA program that can be used for financing commercial real estate. It is usually a variable rate pegged to Prime amortized over 25 years and it can also be fixed for 5 or more years at a time, but that will be the subject of another post.
The Fake 504 Fixed Rate
Historically, most lenders will offer a first mortgage that is fixed for 5 years (or so) at a time and they (legally) advertise it as a “fixed rate,” but we all know it isn’t and that is why I typically refer to the program as “mostly fixed” (intelligent sounding, I know).
But now there is a new option IF you have a “multi-purpose” or “multi-use” building – a new true/real 25 year fixed rate 504 first mortgage loan. If you are unfamiliar with SBA financing it is only for “51% or more owner occupied business property” – please get in touch if you need clarification on this: jking (at) green commercial capital (dot) com.
It is not available for “single use” properties like hotels or self storage, but any owner occupied building that could house multiple types of businesses should be eligible including medical and dental offices, warehouses, manufacturing facilities, light industrial buildings and even an office building where your business occupies at least 51% of the space.
The rates for the first mortgage are very good at the moment – 5% to 5.5% depending on loan size, length of prepay penalty, etc.
504 2nd Mortgage Rates
The rates for the 20 year fixed rate 2nd mortgage as of today (they change monthly) are as follows:
4.462% for a purchase or acquisition loan
4.665% for a refinance loan
The 10 year fixed rate 504 loan is currently:
4.003% for a refinance
The 10 year loan is typically used for equipment financing transactions.
Great Blended Rate
The combination of the 2 fixed rate loans is hard to beat – a 25 year first mortgage in the low to mid 5’s and a second in the mid 4’s – and unless something really dramatic happens to our economy, you shouldn’t need to worry about financing your building ever again.
For more information about 504 loans: www.greencommercialcapital.com