SBA Announces Dip in 504 Loan Rates

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INDIANAPOLIS (April 15, 2009)—Historic low interest rates announced this week by the U.S. Small Business Administration’s (SBA) 504 loan program, combined with the recent elimination of two real estate financing fees, generate compelling new options for business owners who plan to expand their facilities and operations, according to Premier Capital Corporation Executive Director David Amick.

Amick pointed to the significant opportunity available to small business owners and lenders who choose to utilize the SBA 504 loan program. The current 5.25 percent interest rates follow the temporary suspension of two fees typically required by the 504 loan program. These two developments enhance an already outstanding borrowing program, Amick added.

The 504 loan program accessed through Certified Development Companies (CDCs), the local organizations that work in tandem with lenders and small businesses, currently offers long-term, fixed-rate financing for commercial real estate at the lowest interest rate since the program’s inception. The SBA works with its local lending partners—the CDCs—to provide such loans for small business borrowers who wish to use the financing program to leverage their investment and grow their business.

Following is a brief summary of the changes behind these new financing options:

* On Monday, April 13, the 504 program announced a 5.25 percent 20-year fixed interest rate, the lowest in the program’s history. Business owners who plan to seek financing for facility expansions can lock in 20-year fixed rate financing on a portion of their expansion project creating certainty in cash outlay for occupancy costs.

* A major component of the federal government’s stimulus package unveiled in February eliminates two processing fees associated with 504 loan programs. The elimination of these fees is expected to last through 2009, or as long as funds are available, Amick said. For example, on a $1 million loan, a borrower can save roughly $20,000.

“Businesses of all kinds need long-term, fixed-rate financing options to acquire the real estate or the equipment they need to expand their businesses and create jobs,” Amick said. “That has been a challenge in the current environment. We’re living in an era in which tighter credit markets and the general economic downturn have forced many small businesses to delay their growth plans or cease operations entirely.

“I believe this new combination of rate incentives and stimulus measures will spur significant new activity for businesses everywhere and help advance our nation’s economic recovery,” Amick added. “Business owners who take advantage of these incentives will reduce a portion of their out-of-pocket expenses, lock in long term fixed rates creating positive new opportunities in the marketplace.”

About Premier Capital CorporationSince 1976 Premier Capital Corporation has empowered more than 800 Indiana businesses by serving as one of the state’s leading certified development companies accredited by the U.S. Small Business Administration (SBA). By supporting both business owners and bankers, Premier Capital is truly an engine of the Indiana economy, putting the power of the SBA in the hands of business owners and lenders and providing long-term financing for real estate, machinery and equipment.

Source: Premier Capital Corp.
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