Helping companies find the money They need to grow

March 2023 Rates

6.27%

10 Year Fixed

6.04%

20 Year Fixed

6.11%

25 Year Fixed

SBA Comparative Loan Analysis
7(a) vs. Lender & 504

Commercial Real Estate Project Totaling $1,000,000

 

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7(a)
Lender & 504 $
Lender & 504 %
504N/A$400,00040%
Lender (90%)$900,000$500,00050%
Down Payment (10%)$100,000$100,00010%
Total Project (100%)$1,000,000$1,000,000100%
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7(a)
LENDER & 504
LENDER
504
Loan Amount$900,000$900,000$500,000$400,000
Interest Rate17.00%5.76%7.00%4.16%
Years Amortized20202020
7(a) Guarantee Fee (paid up front)$20,250N/AN/AN/A
7(a) Processing Fee2$3,896N/AN/AN/A
504 Lender Participation FeeN/A$2,500$2,500N/A
504 Processing Fee (included in 504 note)N/A$6,000N/A$6,000
504 Guarantee Fee (included in 504 note)N/A$2,000N/A$2,000
504 Funding Fee (included in 504 note)N/A$1,000N/A$1,000
504 Underwriter Fee (included in 504 note)N/A$1,636N/A$1,636
TOTAL SBA FEES$24,146$13,136
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-

 

 
7(a)
LENDER & 504
LENDER
504
TOTAL NOTE AMOUNT$900,000$911,000$500,000$411,0003
Monthly Payment$6,978$6,402$3,876$2,526
Effective Interest Rate7.00%5.76%7.00%4.16%
Total Principal & Interest$1,678,616$1,536,551$930,359$606,193
Cash Down Payment$120,250$100,000
-
-
Total Cash$1,798,866$1,636,551
-
-
504 Cash Savings
-

$162,315

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-

Notes:

  • Lenders do not have to be a licensed SBA lender to participate in the 504 program
  • Lenders have no servicing requirements on the 504 loan
  • Lenders do not have to remit monthly SBA fees on 504 as they do with 7(a)
  • Lenders’ rates typically adjust every 3 – 5 years
  • The 504 rate is fixed for the 20 year term on the 504 portion of the loan

Footnotes:

¹ The 5.76% interest rate is a blended rate of the 504 loan and the Lender loan.

² The 7(a) processing fee is paid by the Lender via the SBA 1502 report monthly on each 7(a) loan. The amount is .494% of the interest on the SBA quarantined portion of the loan.

³ 504 fees are included in the note amount and rounded to the nearest $1,000. In this example the $6,000 + $1,000 + $1,636 = $8,636 is rounded to $9,000 and is included in the note. This takes the 504 portion of the loan from $400,000 to $409,000. The rounding difference of $364 will be refunded to the borrower when the 504 loan is booked.