SBA 504 25-Year Debentures

SBA 504 25-Year Debenture

Big Sky Finance has great news for businesses looking to free up their working capital and lower their debt service and down payment. SBA is making available a new SBA 504 loan with a 25-year maturity, which will be in addition to the existing 10 and 20-year loans already available.  As with the current loans, the interest rate on the SBA note will be fixed for the entire term.

By extending the loan term an additional 5 years, monthly loan payments will be decreased providing flexibility for small businesses to better manage their operating capital and cash flow, particularly in a rising rate environment.  For small business borrowers to be better equipped to decide what term loan is best for them, here are some variables to consider:

  • This new 25-year debenture is available for 504 projects approved on or after April 2, 2018. Any 504 loans already approved prior to this date may not be extended to 25 years.
  • The term of the Third-Party Lender’s note must be at least 10 years (same as for the current 20-year notes).
  • The voluntary prepayment schedule will stay the same as for 20-year loans – 10-years for 25-year loans.
  • The July 2018 sale will be the first one to contain 25-year debentures and monthly thereafter, provided there are approved 25-year loans each month.
  • The fee structure is the same as for 20-year loans and debentures.
  • Projects must meet all existing SBA 504 Loan program requirements.

Brandon Berger, Finance Director, is excited to have this available to small business owners across Montana looking to expand their operations.  “This is another great option for small business owners looking to finance the acquisition or construction of owner-occupied commercial real estate for their business operations!  25 years is a great term for these types of projects, particularly when one considers the rate on SBA’s portion is fixed for the life of the loan and has a down payment requirement as low as 10%!”

For more information about this new SBA 504 loan with a 25-year maturity, or any questions regarding the SBA 504 Loan program, contact your 504 experts here at Big Sky Finance.

Brandon Berger, Director               406.869.8403
Sherry O’Donnell, Loan Officer          406.441.5446
Jo Ann Jones, Loan Officer       ​            406.441.5447
Ben Rose, Loan Officer                                406.869-8415