An SBA 504 loan does not have one rate. It is normally two loans working together: a conventional first mortgage from a bank or other senior lender, plus a fixed-rate second mortgage arranged by a Certified Development Company, or CDC. The borrower contributes the remaining project cost. Understanding those three pieces is the only reliable way to compare a 504 quote.
As of August 31, 2026, several CDCs were publishing effective rates in the low-6% range for the CDC portion. That is useful market context, but it is not a universal quote. The bank portion is priced separately, and timing, fees, property, borrower contribution, and loan structure all affect the combined cost.
SBA 504 rates as of August 2026
The following is market context, not a commitment to lend. Current CDC rate pages at the end of August 2026 showed approximate effective rates around these levels:
| CDC maturity | Published market context | What to verify |
|---|---|---|
| 10 years | About 6.19% | Debenture month, fees included, payment start date |
| 20 years | About 6.27% | Effective rate, prepayment schedule, servicing costs |
| 25 years | About 6.27% | Effective rate, total financed fees, first-payment timing |
The SBA's official 504 program page explains that 504 rates are pegged to an increment above the market rate for U.S. Treasury issues and that 10-, 20-, and 25-year maturities are available. For the current monthly number, verify a dated CDC source such as the TMC Financing 504 rate page and confirm it with the CDC handling your application.
Why the caution? A project authorized in one month may fund into a later debenture pool. The rate you saw while shopping is not necessarily the final CDC rate. Ask the CDC when the debenture is expected to fund and which rate is an estimate versus locked.
How the 504 capital stack works
Consider a $1.5 million owner-occupied property project. A common structure might look like this:
| Source | Share | Illustrative amount |
|---|---|---|
| Bank first mortgage | 50% | $750,000 |
| CDC/SBA second mortgage | 40% | $600,000 |
| Borrower contribution | 10% | $150,000 |
The $600,000 CDC loan might be fixed for 25 years. At an illustrative 6.27% effective rate, its principal-and-interest payment is about $3,965 per month. That is only the CDC payment. You must add the bank payment, property taxes, insurance, association costs, and any other project obligations to understand the real monthly burden.
The bank could amortize its $750,000 over 20 or 25 years but mature earlier, creating a refinance or balloon-payment decision. Two proposals with identical bank rates can therefore carry different risk. Compare:
- Bank rate and whether it is fixed, variable, or subject to resets
- Amortization period and maturity date
- Balloon balance at maturity
- Prepayment language
- Origination, appraisal, environmental, legal, and closing costs
- Required debt-service coverage and financial covenants
What moves your final rate and payment
Debenture pricing. The CDC rate is tied to the debenture market. Treasury movement and the month in which the debenture funds can change the final result.
The senior lender's pricing. The first mortgage is not priced by a national 504 table. The bank evaluates repayment ability, management, property, industry, guarantors, project leverage, and its own cost of funds.
Borrower contribution. Ten percent is a useful starting point, not a promise. A startup or special-purpose property may require additional equity. More cash down reduces both loan balances and monthly payments, but it also consumes liquidity the business may need after closing.
Eligible project costs. Land, construction, renovation, long-life machinery, professional fees, and certain interim costs can fit when properly documented. Working capital and inventory do not belong in a standard 504 project. Review the eligible-use rules with the CDC early rather than trying to restructure the sources and uses at closing.
Fees financed into the CDC portion. Some program costs can be financed, which preserves cash but increases principal and total interest. Compare the gross debenture amount with the net project proceeds.
How to compare a 504 quote correctly
Ask every lender or CDC for the same seven numbers:
- Total eligible project cost
- Borrower cash contribution
- Bank first-mortgage amount, rate, amortization, and maturity
- CDC gross and net loan amounts
- Estimated CDC effective rate and debenture month
- All third-party and lender fees
- Combined monthly debt service
Then run a downside case. What happens if the bank rate resets two points higher? What happens if construction costs rise by 5%? How much unrestricted cash remains after the equity injection and closing costs? A project can qualify on paper and still leave the operating company too thin.
For a broader comparison of owner-occupied property options, see the commercial real estate financing guide. If the project includes working capital or an acquisition alongside the property, an SBA 7(a) structure may be more flexible even if the fixed-asset portion costs more.
The practical verdict
SBA 504 can be an unusually strong structure for an established business buying or improving a long-life fixed asset. The CDC portion provides long fixed pricing, and the lower borrower contribution can preserve cash compared with many conventional property loans.
But do not choose it from the CDC headline rate alone. The correct comparison combines the bank payment, CDC payment, equity contribution, financed fees, balloon risk, prepayment terms, and time to close. EQ Funding can route one application to lenders that compete across SBA and conventional structures; the borrower still decides which complete term sheet fits the project.