SBA 504 Loan Rates in 2026: What to Expect

SBA 504 rates have a unique structure that most borrowers misunderstand. Here's how they work, what to expect in 2026, and how to evaluate the real cost of your loan.

Why SBA 504 Rates Are Different

Unlike a conventional mortgage or an SBA 7(a) loan — which come from a single lender at one rate — the SBA 504 has two separate financing pieces with two different rates:

The bank first lien (50% of project): Rate is set by the participating bank. Can be fixed or variable. Negotiated between you and the bank.
The CDC/SBA debenture (40% of project): Rate is set by the bond market. Fixed for the life of the loan. Published monthly by the SBA's NADCO.

When people refer to "the SBA 504 rate," they're usually referring to the CDC debenture rate — the fixed portion that the SBA controls.

How the SBA 504 Debenture Rate Is Set

The debenture rate is based on a monthly SBA bond sale. CDCs pool debentures and sell them as bonds to investors. The rate borrowers receive is essentially:

The current 10-year or 20-year Treasury bond yield (depending on loan term)
Plus a spread for the debenture (typically 0.4–0.8%)
Plus SBA ongoing guarantee fees (approximately 0.5% per year built into the payment)
Plus CDC servicing fee (approximately 0.625% per year)

This means the all-in effective rate on the debenture portion is typically Treasury yield + 1.5–2% in approximate terms.

What Are SBA 504 Rates in 2026?

As of early 2026, with 10-year Treasuries trading in the 4.2–4.6% range:

10-year SBA 504 debenture rate: approximately 6.0–6.6% effective
20-year SBA 504 debenture rate: approximately 6.2–6.8% effective
25-year SBA 504 debenture rate: approximately 6.3–7.0% effective

These rates change monthly. For the most current rates, contact a CDC directly or check the NADCO website.

Note: These are estimates for the debenture portion only. Your bank first-lien rate is separate and negotiated independently.

How to Calculate Your Blended Rate

To compare the true cost of a 504 loan, calculate the blended effective rate across both pieces:

Identify the bank rate and amount (typically 50% of total project at bank's offered rate)
Identify the SBA debenture rate and amount (typically 40% of total project at current month's debenture rate)
Weight each by its share of total financing: Blended rate = (50% × bank rate) + (40% × debenture rate) ÷ 90%

Example: Bank rate 7.0% on 50%, debenture rate 6.5% on 40% = blended rate of approximately 6.78% on the financed portion.

SBA 504 vs Conventional Loan Rates

Conventional commercial real estate loans in 2026 typically carry rates of 7.0–8.5% depending on LTV, property type, and borrower profile. The 504 blended rate is often 50–150 basis points below equivalent conventional financing — and comes with a fixed long-term component that conventional financing rarely offers at the same terms.

The rate advantage is most pronounced for 20- and 25-year terms, where conventional fixed-rate products are difficult to find at any price.

What Affects Your Actual Rate

Several factors influence your final 504 pricing:

Closing month: Debenture rates change monthly with bond market conditions.
Loan term: Longer terms generally carry slightly higher rates.
Bank first-lien terms: Your negotiating power with the bank matters. A stronger borrower profile and well-established banking relationship can improve first-lien terms.
CDC fees: Each CDC has slightly different fee structures. Shopping CDCs can yield minor differences.
Green/energy efficiency: Some projects qualify for additional debentures at favorable terms under the Energy Public Policy goal.

Frequently Asked Questions

Is the SBA 504 rate fixed or variable?

The CDC debenture portion is fully fixed for the life of the loan — 10, 20, or 25 years. The bank first-lien portion can be fixed or variable depending on the participating bank's terms and your negotiation.

How often does the SBA 504 rate change?

The debenture rate is set monthly based on that month's bond sale. Once your loan closes, your debenture rate is locked permanently regardless of future market changes.

Are there prepayment penalties on SBA 504 loans?

Yes — the debenture has a prepayment penalty that declines over the first half of the loan term (for a 20-year loan, penalties apply during years 1–10 and phase out). The bank first lien may also have prepayment terms. Review both before committing.

What fees are included in the SBA 504 rate?

The effective rate includes SBA guarantee fees, CDC servicing fees, and central servicing fees — these are typically built into the monthly payment rather than charged separately at closing.