Who Are the Top SBA 504 Lenders?
Each year, the SBA insures billions of dollars in 504 loans . In fact, in 2017, annual SBA 504 loan volume hit a new high of $5 billion— but who are the most highly-qualified lenders issuing these loans? In 2018, some of the top-rated SBA 504 lenders included Wells Fargo, JPMorgan Chase, US Bank
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Each year, the SBA insures billions of dollars in 504 loans. In fact, in 2017, annual SBA 504 loan volume hit a new high of $5 billion— but who are the most highly-qualified lenders issuing these loans? In 2018, the top-rated SBA 504 lenders include:
Wells Fargo
JPMorgan Chase
US Bank
TD Bank
Bank of the West
Regions Bank
Pinnacle Bank
Bank of America
SunTrust
Capital One
Fidelity Bank
What are the qualifications for an SBA 504 loan?
To qualify for an SBA 504 loan, the business must be a for-profit small business with a net worth below $15 million. The business must also create or maintain jobs, occupy the property acquired with the loan, have good credit and a good financial history. Additionally, the business cannot be a non-profit, real estate investor, or religious institution. For more information, please see SBA 504 Loan Requirements for Borrowers, Projects, Lenders, and More and SBA 504 Loans and Commercial Real Estate: What You Need to Know.
What are the benefits of an SBA 504 loan?
The SBA 504 loan program offers several benefits to businesses, including long-term, fixed-rate financing, lower interest rates and down payment requirements than SBA 7(a) loans and Express loans, and the ability to purchase fixed assets such as real estate and equipment. The loan is also backed by the SBA, reducing risk for lenders who put up half the cost of the project. In the case of default, the private lender has first lien on project assets. Terms for SBA 504 financing are typically 10, 15, or 20 years, and the loan is fully amortized without a balloon payment.
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What are the eligibility requirements for an SBA 504 loan?
In order to take out an SBA 504 loan, your business must meet the following eligibility requirements:
- Your business must be a for-profit organization.
- Your business must meet current SBA size standards.
- Your business’ net worth cannot exceed $15 million.
- Your business cannot earn 1/3 or more of its income from packaging SBA loans.
- Your business must earn an average of $5 million or less per year (after taxes, and only for the preceding two years).
- Your business cannot be engaged in any sort of passive or speculative activities.
Note that additional requirements may be placed by CDCs or conventional lenders. You can find a full list of eligibility requirements and other important information with the SBA here.
What is the maximum loan amount for an SBA 504 loan?
The SBA 504 maximum loan amount is currently set at $5 million in lifetime dollars. However, if your business is a small manufacturer, you can borrow up to $5.5 million in lifetime dollars. It should also be noted that if you decide to embark on energy-related projects that fall under the “go green” heading, you can borrow substantially more. While all projects are capped at $5 million, you can ultimately borrow up to $16.5 million in lifetime dollars.
Source: https://sba504.loans/sba-504-blog/what-is-the-sba-504-maximum-loan-amount
What are the interest rates for an SBA 504 loan?
The interest rate for an SBA 504 loan is based on the 10-year or 20-year Treasury bond rate, plus a guarantee fee paid by the lender to the SBA, a servicing fee paid to the CDC, and a fee to the central servicing agent. The interest rate will be the sum of these fees, plus the bond rate that applies to the loan. For example, a 10-year loan will be based on the 10-year Treasury bond rate, and a 20-year loan will be based on the 20-year Treasury bond rate. Additionally, there is a 2.15% one-time fee payable to the SBA. For more information, please visit https://sba504.loans/rates-and-costs/.
Note that ranking the best 504 lenders is actually a complicated situation because the conventional lender only supplies 50% of the funds for your loan. You supply 10% (usually), and the remaining 40% comes from a CDC in your local area. To find a CDC in your area, you will need to contact your local SBA office. You can find links to your local SBA office here.
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