Current SBA 504 Loan Rates May 2026: What You Will Actually Pay

Unlike SBA 7(a) loans which carry variable rates tied to the Prime Rate, SBA 504 loans have a fixed interest rate on the CDC portion that is set at funding and never changes. That fixed rate is one of the 504 program's most compelling features: borrow at today's rate for 25 years, regardless of where rates go. Understanding how that rate is calculated, what it is right now, and how it compares to your conventional lender's portion is essential before entering any 504 transaction.

How SBA 504 Rates Are Set

The CDC portion of every 504 loan is funded through SBA debentures — bonds sold monthly by NADCO (National Association of Development Companies) on behalf of CDCs nationwide. The rate on those debentures is determined by the monthly auction and is tied to the current yield on 10-year US Treasury bonds. The effective rate you pay includes four components rolled into a single all-in figure: the underlying Treasury bond rate, a CDC servicing fee of approximately 1.5% annually, an SBA guarantee fee of approximately 0.641% annually, and a central servicing agent fee of approximately 0.10% annually. These are incorporated into the effective rate published monthly by NADCO — you do not pay them separately.

Current SBA 504 Effective Rates: May 2026

Rates below are effective for loans funded in May 2026, based on NADCO debenture pricing. All rates are inclusive of fees to CDC, SBA, and central servicing agent:

• 10-year term: approximately 6.2% to 6.5% (10-year debentures fund every other month — confirm May availability with your CDC)
• 20-year term: approximately 6.5% to 6.8%
• 25-year term: approximately 6.6% to 6.9%

Important: These are approximate ranges based on recent NADCO auction data. The exact rate for your loan is set at the specific debenture auction in the month your loan funds — not at application or approval. Because rates change monthly with Treasury yields, your final rate may differ from current quotes. Always confirm the current rate directly with your CDC before closing.

For manufacturers (NAICS codes 31, 32, or 33), separate manufacturing rates apply under SBA's fiscal year 2026 guidance. The SBA is also waiving certain guarantee fees for small manufacturers in FY2026 — confirm eligibility with your CDC before closing.

The Three-Part Rate Structure: What You Actually Pay

Borrowers receive two different interest rates in a 504 transaction: one on the CDC portion and one on the conventional lender's portion. The blended effective rate across the full project is what actually matters for financial planning.

Standard 504 project structure:

• 50% from your conventional lender — at their own rate, typically variable based on Prime or SOFR plus their spread. With Prime at 6.75% in May 2026, expect conventional rates of 7.5% to 9.5% on this portion.
• 40% from the CDC — at the fixed SBA 504 rate (approximately 6.6% to 6.9% for 25-year loans in May 2026)
• 10% from the borrower — your equity injection

The blended effective rate across the 90% financed is typically 7.0% to 8.5% for well-qualified borrowers in May 2026. This is generally below what a conventional commercial mortgage alone would carry, because the CDC portion pulls the blended rate down.

Startups and single-purpose properties (hotels, car washes, funeral homes, gas stations) typically require 15% equity injection rather than 10%, which changes the weighting and blended rate calculation.

How May 2026 Rates Compare to Recent History

The 10-year Treasury yield — the primary driver of 504 CDC rates — has been in a range of approximately 4.0% to 4.8% in early 2026, following Federal Reserve rate adjustments in February and March 2026. For borrowers who locked in 504 rates in 2020 and 2021 when 25-year effective rates were in the 2.5% to 3.5% range, current rates are significantly higher. For borrowers comparing to conventional commercial real estate financing in the current environment, 504 rates remain competitive, particularly given the fixed-rate certainty on the CDC portion for 25 years.

The Value of the Fixed Rate in 2026

Consider a $1 million CDC debenture (40% of a $2.5 million total project):

• At 6.75% fixed over 25 years: approximately $6,900 per month
• If rates increased to 8.75% over the loan life at a variable rate: approximately $8,000 per month — a difference of $330,000 over 25 years

This fixed-rate protection is why many businesses specifically seek 504 financing for long-term real estate and equipment, even when conventional floating-rate financing is initially available at similar rates.

Four Actions to Take This Week

1. Contact a CDC in your area for the current May 2026 effective rate — only a CDC can give you the exact number for your loan size, term, and sector. Find CDCs at sba.gov/partners/lenders/certified-development-companies
2. Get your conventional lender's rate simultaneously — the blended rate across both portions determines your true financing cost
3. Confirm your equity injection requirement — 10% for established businesses, 15% for startups or single-purpose properties
4. Ask about the manufacturing rate if your NAICS code is 31-33 — separate rate tiers and potentially higher maximum loan amounts ($5.5 million vs $5 million) apply

Disclaimer: This article is for informational purposes only and does not constitute legal or financial advice. SBA 504 rates are updated monthly and change with Treasury yields. Always verify current rates directly with a CDC or SBA-approved lender before making any financing decision.

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