A business owner called me last week about buying the warehouse he has leased for nine years. His first question was simple: “What is the SBA 504 rate today?” The honest answer has two parts, because SBA 504 loan rates are not one rate. They are two rates blended together, and only one of them is set by the SBA’s monthly bond sale.
Here is how both pieces get priced, what the numbers look like right now, and how to estimate your real cost before you talk to a lender.
What Are SBA 504 Loan Rates Made Of?
A 504 project is financed in layers. A bank or other first-lien lender funds about 50% of the project. A Certified Development Company (CDC) funds about 40% through an SBA-guaranteed debenture. You put in roughly 10% down. That down payment rises to 15% for a special-purpose property or a startup, and to 20% if both apply.
The two lender pieces carry different rates:
- The bank first mortgage (about 50%). Priced by the bank, negotiated with you, and usually tied to prime or a Treasury index. Terms vary by lender.
- The CDC debenture (about 40%). Priced by the market on a set monthly date and fixed for the full term. This is the “504 rate” you see quoted online.
That second piece is what makes the program valuable. The SBA describes the 504 as long-term, fixed-rate financing for major fixed assets, with 10, 20, and 25-year maturities. You can read the program basics on the SBA’s 504 loan page.
How Is the SBA 504 Debenture Rate Set?
The CDC’s portion is funded by bonds that are sold to investors once a month. The rate is based on a Treasury yield plus a fixed increment that covers servicing and program costs. Per the SBA, the rate is tied to the 10-year Treasury market rate plus that set increment. Once your debenture is sold, the rate is locked for the life of the loan.
Three details matter in practice:
- You do not negotiate the debenture rate. The increment is not a lender spread you can shop. What you can shop is the bank piece.
- The rate is not final until the sale. Between your approval and the funding date, the quoted rate is an estimate. Most CDCs will tell you which monthly sale your loan is targeting.
- The quoted rate usually includes ongoing fees. Published debenture rates generally already include the CDC, SBA, and servicing agent annual fees, so the rate you see is close to your true cost on that portion.
Because the debenture follows the Treasury market, it moves with the same forces we covered in our post on the Fed rate hike and commercial real estate loans. According to FRED’s 10-year Treasury series, the yield was 5.10% on October 15, 2026, down from 5.24% on October 9.
What Are Current SBA 504 Rates?
Based on the CDC pricing published after the October 8, 2026 debenture sale, standard 20-year and 25-year debentures priced at about 6.97%. Projects that qualify for the lower-fee group, such as manufacturers, certain food supply chain businesses, and rural projects, priced about a quarter point lower, in the 6.73% to 6.74% range. Refinance debentures priced the same as standard projects.
| Debenture term | Standard project | Manufacturing, food supply chain, rural |
|---|---|---|
| 20-year | about 6.97% | about 6.73% |
| 25-year | about 6.97% | about 6.74% |
Treat these as a snapshot, not a quote. Rates reset with each monthly sale, and I have seen published 10-year figures that lag the most recent pricing cycle. Confirm the current month with a CDC before you build a pro forma around any number you read online, including this one.
What Does a 504 Loan Really Cost? A Blended Example
Your effective rate is the weighted average of the bank piece and the debenture. Here is a simple example on a $2,000,000 owner-occupied building, using an illustrative 7.50% bank rate.
- Bank first mortgage: $1,000,000 (50%) at 7.50%
- CDC debenture: $800,000 (40%) at 6.97%
- Your down payment: $200,000 (10%)
The blended rate on the $1,800,000 that is financed works out to roughly 7.26%. The debenture payment on a 25-year term is about $5,639 a month. On a 20-year term it is about $6,188 a month. The 25-year term is available for acquiring owner-occupied real estate and related costs, and it is the one I steer most buyers toward for cash flow.
Compare that to financing the same building with a conventional loan at 80% LTV. You would bring $400,000 to closing instead of $200,000, and the full balance would carry a bank rate with a shorter fixed period. We break down that tradeoff in SBA 504 vs. 7(a).
From a recent deal: I recently structured a 504 for a regional distributor buying the 28,000 square foot warehouse he had leased for years. His bank piece came in at roughly 150 basis points over the debenture rate. Because the CDC portion was locked for 25 years, his payment was predictable even though rates moved during underwriting. The 10% down payment kept his working capital intact, which mattered more to him than shaving a few basis points off the bank rate.
Looking at an owner-occupied building purchase? We structure 504 and conventional deals nationally. Schedule a 15-minute call →
What Fees Come on Top of the Rate?
The debenture rate covers ongoing servicing costs. One-time fees are separate and are usually financed into the loan:
- SBA guaranty fee. A one-time fee on the debenture amount, set by fiscal year. Some borrowers, including manufacturers, qualify for waivers.
- CDC processing fee. A one-time fee that can run up to about 1.5% of the debenture. On an $800,000 debenture, that is up to $12,000.
- Third-party costs. Appraisal, environmental report, legal, and title. These are the same costs you would pay on any commercial purchase.
Fee schedules change each October 1. Ask your CDC for the current fiscal year schedule in writing and fold it into your total cost, not just the headline rate.
Is a 504 Loan Cheaper Than a Conventional Loan?
Often the debenture rate beats what a bank would charge for a 25-year fixed rate on the same dollars. The bigger advantage is structure. You get long-term fixed financing on 40% of the project, low down payment, and no balloon on that piece.
The tradeoffs are real. A 504 takes longer to close than a straight bank loan, usually 60 to 90 days. Prepayment on the debenture carries a declining penalty. And the property has to be owner-occupied, so this is not an investor product. I tell clients that if speed matters more than the last half point, a conventional or 7(a) structure may fit better. If you hold the building for a decade or more, the 504 usually wins.
If you already own a building with debt that is coming due, the same program can refinance it under certain conditions. See our guide on how to refinance a maturing commercial loan, and the full program overview in our SBA 504 loan guide.
Frequently Asked Questions
Are SBA 504 rates fixed or variable?
The CDC debenture portion is fixed for the full term once the debenture is sold. The bank’s first mortgage portion can be fixed or adjustable depending on the lender, so ask which structure is being offered.
How often do SBA 504 rates change?
Debenture rates reset once a month, when the monthly bond sale prices. Your rate is not locked until your debenture sells, so it can change between approval and funding.
What is the minimum down payment on a 504 loan?
Typically 10%. It rises to 15% for a startup or a special-use property, and to 20% when both apply.
Can I negotiate the 504 rate?
Not the debenture rate. It is set by the market and the SBA’s fixed increment. You can negotiate the bank piece, which is why I recommend getting competing quotes on that 50%.
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This article is for informational purposes only and does not constitute financial, legal, or tax advice. Loan terms, rates, and availability vary by borrower, property, and market conditions. Consult Willowbrook Capital for scenario-specific guidance.