New 25yr Term for the SBA 504 Loan
The U.S. Small Business Administration has begun accepting applications for a new 25-year term SBA 504 loan, says an official notice released by the agency on Tuesday.
SBA 504 loans are designed for small businesses to finance commercial real estate or large equipment for use in business operations.
The new 25-year term loan will complement the 20-year and 10-year terms traditionally offered with 504 loans. The idea behind extending the payment cycle on a 504 loan is to reduce monthly loan payments for borrowers in the face of increasing operating expenses and interest rates, the notice said.
WHAT ARE THE 25-YEAR TERM 504 LOAN FEATURES?
The SBA’s notice offers these important highlights:
- The 25-year debenture will be issued in a standalone fund pool.
- The third-party lender accompanying a 25-year 504 loan has to issue a minimum 10-year term on its participated note.
- 25-year debenture sale is projected to occur monthly like the 20-year debenture. The final decision will depend on demand for the product.
- 20-year term SBA 504 loans approved before April 2nd cannot be extended to 25 years.
- 25-year debenture is available on or after April 2nd for processing at center.