SBA 504 Loan Interest Rates

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Official monthly SBA 504 effective interest rate tables can be found at Eagle Compliance LLC. 25- and 20-year term loans fund every month; 10-year term loans fund every other month. Effective interest rates are inclusive of servicing fees, which are subject to credit risk of the applicant.

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504 Bridge Loan Program

Frequently Asked Questions

One of the most critical stages for a commercial lending partner in an SBA 504 loan is the interim phase of a project between their closing and the SBA takeout of the second mortgage, during which time the commercial lending partner is at risk on the second mortgage.

The 504 Bridge Loan Program, available for any Florida SBA 504 loan, addresses this exposure and timing difference by providing commercial lending partners with bridge loan funds to cover the second mortgage until the permanent SBA second mortgage takeout occurs.

To participate in the Bridge Loan Program, 504 commercial lending partners enter into a participation agreement. Contact a 金沙电子app登录 loan expert for more information.

504 bridge loan proceeds are provided as part of a $97.6 million allocation from the U.S. Department of Treasury for the state of Florida’s participation in the State Small Business Credit Initiative (SSBCI). The SSBCI is a federal initiative of the U.S. Small Business Jobs Act of 2010 that encourages states to establish or strengthen state programs that support lending to small businesses.

NOTE: The 504 Bridge Loan Program is available in Florida only.

Bridge loan funds may be used for interim project financing of the second mortgage of authorized SBA 504 loan projects, including owner-occupied commercial real estate (turn-key acquisitions, renovation or build-out projects and ground-up construction) and/or fixed heavy duty machinery and equipment purchases.

Bridge Loan Sizes – Loans amounts are generally capped at $5 million (SBA portion).  Certain eligible energy-efficient or manufacturing projects may qualify for up to $5.5 million, in line with SBA standards.  Generally, the total project limit is $20 million. (This restriction applies to the principal amount of the loan directly supported by the 504 bridge loan, plus all other loans for the same loan purpose that close on or about the same date.)

Interest Rate – The second mortgage bridge loan and note will bear interest at a rate set by the commercial lending partner, at least equal to the rate applicable to the first mortgage note during the interim.

Origination Fees – For straight acquisition projects and projects with renovations, the commercial lending partner agrees to pay an amount equal to one half of the origination fee attributable to the second mortgage bridge loan or .5% (one half of one percent) of the principal sum of the bridge loan, whichever is greater. For ground-up construction projects, the origination fee is 1% (one percent) of the principal sum of the bridge loan.

Commercial Lending Partner Servicing Fee – The commercial lending partner is entitled to retain a servicing fee on the bridge loan of 1.25% during the first six (6) months of the term of the bridge loan, provided the bridge loan is not in default (straight acquisition projects and projects with renovations only; servicing fees are not applicable for ground-up construction projects). The servicing fee shall be a portion of interest payments made by the borrower equal to 1.25% divided by the non-default annual interest rate payable on the bridge loan.

For example, assume the borrower’s monthly interest payment on the second mortgage bridge loan is $1,000 at an interest rate of 5%.  By utilizing the described calculation (1.25% ÷ 5%), the commercial lending partner would retain 25% of the total interest collected ($250) as the servicing fee.

Term – The initial term of the bridge loan is six (6) months. If the 504 loan has not funded by expiration of the initial six (6) month term, the second mortgage bridge loan will be automatically extended at six (6) month increments with the following pricing adjustments:

  • Upon extension of the term, the servicing fee the commercial lender is entitled to retain on the bridge loan ends (this provision applies to non-ground-up construction projects only).
  • If the term of the second mortgage bridge loan is extended beyond one year (and for every 6-month period of extension thereafter), there will be a 0.25% (one quarter of one percent) extension fee.

Funding – Assuming participation interest of 100% of the second note, funds from the bridge loan must comprise between 45% and 75% of the total amount of loan funds disbursed at all times during the interim.

Recourse – The 504 Bridge Loan is non-recourse to the permanent lender.

Repayment – Bridge loan funds are repaid through takeout via the SBA 504 loan.

504 bridge loans are provided by the Florida Department of Economic Opportunity and Enterprise Florida and processed by 金沙电子app登录

Following the normal underwriting and approval process of the SBA 504 loan, 金沙电子app登录 distributes a borrower certification for signature. The commercial lending partner provides 金沙电子app登录 with its internal credit write up and commitment letter.

If the project includes any renovations or construction, the commercial lending partner provides 金沙电子app登录 with its internal construction monitoring and disbursement policy. The contractor supplies a resume, proof of insurance or bond and estimate of time frame for project completion.

Once the 504 bridge loan documentation is completed and approved, a participation agreement with the commercial lending partner is executed and bridge loan funds are disbursed.

Interested commercial lending partners should contact a 金沙电子app登录 loan officer for an application and other required documents.  Talk to a loan expert to locate one of our loan officers in your local area.  Phone: 850.681.3601 or toll-free 800.504.LOAN.  Email: info@hqc.justinrosolino.com.

NOTE: The 504 Bridge Loan Program is available in Florida only.

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