Good news for new or expanding businesses – a federal loan program’s interest rate is the lowest in the program’s history.

The Small Business Administration (SBA) 504 loan program’s 20-year effective fixed rate for June is 3.98%, the first time it has fallen below 4%. Rates for other term options are also at or near recent lows. The rates have decreased for the past six months and have been below Prime for seven months. Rates are set monthly for loans that have closed the previous month.

SEDA-Council of Governments (SEDA-COG) partners with banks to offer businesses statewide this long-term, fixed-rate financing that can be used to acquire fixed assets for expansion or modernization or to refinance existing real estate or equipment debt. SBA 504 loans can be as small as $100,000 up to $5 million (in some cases $5.5 million).

Benefits of SBA 504 loans:

Long-term, fixed-rate financing (10 years for equipment and 20 or 25 years for real estate)

Lower down-payment vs. conventional financing (as low as 10% for existing businesses)

Financing up to 40% of eligible costs (land and building purchase, building construction, building renovations, equipment, refinancing of real estate or equipment debt)

Loan is fully amortized (no balloon payment)

Reduces risk for the partnering lender

For-profit businesses with a net worth less than $15 million and net income less than $5 million may be eligible. For real estate financing, the business must occupy a majority of the space.

John Reichard, SEDA-COG senior relationship manager, said the SBA 504 loan program is a proven success and win-win-win for the small business, the community and participating lenders.

“Businesses tell us again and again how the SBA 504 low interest rates and long terms help with cash flow and empower them to expand when it otherwise might have been difficult,” Reichard said. “This in turn promotes economic development in our communities.”

SEDA-COG provides SBA 504 loans throughout the state of Pennsylvania. For more information, visit or call 570-524-4491 and ask for the Business Finance Department.