SBA 504 Loan Rates 2026
What Owner-Occupants Are Paying for Commercial Real Estate
SBA 504 loan rates in May 2026 use a two-loan structure. The SBA-backed CDC debenture (typically 40% of the project cost) carries a fixed rate of 5.50% to 6.50% for 20 to 25 years, set monthly by the SBA based on 10-year Treasury yields. The bank first mortgage (typically 50% of the project) is priced separately at 6.00% to 7.50%. The blended effective rate on the combined structure is typically 6.00% to 7.00%, far below conventional commercial mortgage rates for comparable leverage.
Current Rate Table
Rates shown are indicative ranges based on current market conditions. Your actual rate will depend on your specific property, leverage, and borrower profile. Contact Commercial Lending Solutions for a precise quote.
| Leverage Tier | Rate Range | Notes |
|---|---|---|
| CDC / SBA Debenture, 10-year | 5.50% to 6.00% | Fixed for life. Set monthly by SBA. Shorter debenture term. |
| CDC / SBA Debenture, 20-year | 5.75% to 6.25% | Most common SBA 504 structure. Fully amortizing. |
| CDC / SBA Debenture, 25-year | 6.00% to 6.50% | Available for real estate and certain equipment. |
| Bank First Mortgage (50%) | 6.00% to 7.50% | Separately priced by the SBA preferred lender bank. |
Rates are illustrative ranges as of May 2026 and subject to change. All loan programs subject to underwriting approval. Not a commitment to lend.
What Drives SBA 504 Loan Rates
Understanding these factors helps you position your deal for the best available rate.
10-Year Treasury Yield
SBA 504 CDC rates are set monthly based on the 10-year US Treasury yield plus a fixed spread. When Treasury yields fall, SBA 504 rates follow within one month. This makes SBA 504 the most interest-rate-sensitive commercial loan program available.
Debenture Term
Longer debenture terms (25 years vs 20 years) carry slightly higher rates due to added duration risk. The rate difference is typically 25 to 50 basis points.
Bank First Mortgage Pricing
The bank first mortgage (50% of project) is priced independently by the lending institution. Bank competition, the borrower's overall relationship, and the property type all influence this piece.
Project Type
Standard SBA 504 projects (office, retail, industrial, medical) qualify for standard rates. Special purpose properties (hotels, car washes, gas stations) may require a CDC with specific expertise and can see slightly different pricing.
SBA Fees
SBA 504 loans carry an ongoing servicing fee of approximately 0.64% annually, built into the effective rate. The CDC charges a one-time debenture underwriting fee of approximately 1.5% of the CDC loan amount at closing.
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How SBA 504 Loan Compare to Alternatives
Choosing the right loan structure can mean a 100 to 300 basis point difference in your cost of capital. Here is how current rates compare across loan types.
| Loan Type | Current Rate Range | When to Use vs SBA 504 Loan |
|---|---|---|
| SBA 7(a) Loans | 7.50% to 10.50% | More flexible use of proceeds (working capital + real estate), but higher rate and shorter amortization than SBA 504 |
| Conventional Commercial Mortgage | 6.50% to 7.75% | Up to 75% LTV maximum vs. 90% for SBA 504. No SBA guarantee fee. |
| USDA Business Program | 5.25% to 6.50% | Rural locations only, competitive with 504 in eligible areas |
| Life Company Loans | 5.50% to 6.50% | Lowest rates for investment-grade properties but requires 60 to 65% LTV and investor, not owner-user |
SBA 504 Loan Rates 2026: Frequently Asked Questions
What are current SBA 504 loan rates?
SBA 504 CDC debenture rates in May 2026 range from 5.50% to 6.50% for 20 to 25-year terms. These rates are fixed for the life of the loan and set monthly by the SBA based on 10-year Treasury yields. The bank first mortgage (50% of the project) is priced separately at 6.00% to 7.50%. The blended effective rate is typically 6.00% to 7.00%.
How is the SBA 504 rate set?
The SBA sets the CDC debenture rate monthly based on the current 10-year US Treasury yield plus a fixed spread. Rates are published by the National Association of Development Companies (NADCO) on the first business day of each month. The rate you lock at closing is fixed for the life of your loan regardless of future interest rate moves.
What is the down payment for SBA 504?
Standard SBA 504 projects require 10% borrower equity (down payment). Special purpose properties (gas stations, car washes, hotels) require 15%, and startups or businesses in operation less than 2 years require 15%. This makes SBA 504 the highest-leverage commercial real estate financing available for owner-occupants.
What is the difference between SBA 504 and SBA 7(a) for commercial real estate?
SBA 504 is purpose-built for commercial real estate: fixed rate for up to 25 years, fully amortizing, no balloon, and up to 90% LTV. SBA 7(a) is more flexible (real estate plus working capital in one loan) but has higher rates, shorter amortization (up to 25 years for real estate), and a variable rate option. For pure real estate purchases, SBA 504 is almost always the better choice.
How long does an SBA 504 loan take to close?
SBA 504 loans typically close in 60 to 90 days from application. The two-loan structure (bank first mortgage plus CDC debenture) requires parallel processing and SBA approval of the debenture. Commercial Lending Solutions works with preferred CDC lenders and SBA preferred lender banks to minimize the timeline.
Trevor Damyan is a commercial mortgage broker with $1B+ in loans closed and direct relationships with life insurance companies, CMBS desks, debt funds, and non-QM lenders. Rate data is compiled from active lender conversations and closed transaction experience.
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