SBA 504 Loan Maturity of 25 Years Will Be Offered in 2018

There is a change coming to the lineup of Small Business Administration (SBA) loan products. To better meet some borrowers’ needs, in 2018 a 25-year 504 loan option will be available besides the familiar SBA 504 10- and 20-year loans.

This move received approval of the federal Office of Management and Budget, and was announced at the spring meeting of the National Association of Development Companies (NADCO), the Certified Development Company (CDC) trade association. This longer maturity option has been long sought after by the industry and was heralded as a great news. Business owners looking to finance building acquisitions and expansions should also be excited about this development.

Why Would You Want A 25-Year SBA 504 Loan?

Your loan term selection will depend on the needs of your business. Longer maturity means lower monthly payments and improved cash flow for your business. Managing cash flow is a common struggle amongst many small businesses. This new option will allow you to have more cash on hand, relieving potential cash flow issues you may face.

The new, longer maturity will also make the 504 loan more competitive with the SBA 7(a) loan, which already has a 25-year option for real estate. Of course, some business owners will still prefer a 504 loan with a shorter maturity, as the 10- and 20-year options will remain the same.

25-Year Maturity Loans Still Conform to Familiar Guidelines

The 25-year option is new, but it still conforms to all the familiar offerings and guidelines of the traditional SBA 504 loans. It can still be used for the purchase of land or buildings, building improvements or the purchase of equipment. It will still feature a fixed, below-market interest rate based on the rate for U.S. Treasury bonds with a down payment as low as 10 percent.

No timeline has been announced for the introduction of the 25-year loan yet, but it is expected to be available after the first quarter of 2018. The details of the offering are now being worked out among members of the SBA and the other parties involved in the debenture funding process. If you have questions about the 25-year loan option, or want to get a better idea of how utilizing this new offering would help your business, get in touch with a TMC Financing consultant today!

TMC Financing has been a high-volume 504 loan provider for over 35 years. We are a Premier Certified Lender with the SBA, which gives us increased authority to approve, process, close and service loans quickly. 

Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison