September 2014 Newsletter: 504 Rates

Interest rates for debentures sold in September rose modestly to 5.002%.  This .042% increase from August doesn’t even budge the needle out of the “highly attractive, long-term fixed rate” category. Let your borrowers, prospective buyers and business owners looking to expand their facilities, know that the 504 Program is a great way to hedge against the inevitable interest rate increase we keep hearing about.

504 Program Fees to Remain the Same for Federal Fiscal Year 2015

Following SBA’s annual review of the fees charged on the 504 Loan Program, SBA has announced that there will be no increase in fees for loans approved in FY 2015 (beginning 10/1/14).  This announcement primarily addresses the annual fee of .9375% and the one-time guarantee fee of .5%.

SBA annually analyzes the 504 and 7a Loan Programs to determine whether fees need to be increased in the anticipation of any increased subsidy costs to these programs.  Keeping the fees level is an indicator that subsidy costs will not increase for the 504 and 7a.  In fact, the 7a Program hit zero subsidy this year (and returned money to the Federal Treasury).  The 504 Program is expected to return to zero subsidy (and return money to the Federal Treasury) this Federal Fiscal Year.  That’s another benefit associated with these Loan Programs – they historically have operated at a zero subsidy from the taxpayers.  That’s good news for all of us!

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  • About the Author

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    Thomas M. Woebkenberg

    Tom Woebkenberg practices in the firm’s Real Estate Practice Area. His practice consists primarily of commercial real estate transactions. He represents lenders of all sizes throughout Ohio and Northern Kentucky.

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