SBA Announces a New 25-Year Loan Debenture

Release Date: 
Friday, April 6, 2018

WASHINGTON – The Small Business Administration has made a substantial change to one of its most popular loan programs. The SBA is making new 504 loans available with a 25-year maturity.

A 504 loan provides long-term, fixed-rate financing for purchasing and renovating land, buildings and equipment.

“This is a significant change. To have a 25-year fixed-rate in a rising interest rate environment is very advantageous to entrepreneurs looking to expand their business,” said Darcy Carter, SBA Vermont District Director.

The new 504 Loan term complements the 10- and 20-year 504 Loan and Debenture that have been available since 1986. The 25-year option is available for new loan applications approved after April 2. Previously approved loans cannot be changed to the 25-year option.

Small businesses, the Certified Development Company industry and the third-party lenders have emphasized the need for an affordable, fixed-rate instrument with a term-to-maturity more closely resembling other longer term mortgages.

“This option for extending the payment cycle by an additional 60 months gives small business borrowers the opportunity for lower monthly payments, which can significantly help their cash flow,” said Linda McMahon, SBA Administrator. “This increased flexibility in their loan terms will put them in a better position to manage their capital and face challenges like rising operating expenses.”