If you have an SBA 7A loan that is adjusting, you need to take advantage of the rates – specifically the gap between the short and long-term rates. The Fed has raised rates (the prime rate, which they directly control) by 4 ½ % in the last 12 months. Meanwhile, inflation has come down over the previous few months, and the treasury market (which the Fed does NOT directly control, but that moves based on buyers and sellers just like stocks) has reacted positively with lower rates. The result is that loans that price off the treasury market are much lower than prime-based loans.

 An SBA 504 Loan (which prices on treasuries) runs at a blended rate of 6.5%. The average SBA 7A loan is running around 10.5%. That is a 4% difference in rate!!! This difference is a huge saving. Even the cheapest SBA 7A Loans of Prime +1% still yield an 8.75% rate which is 2% higher than the going 504 rate. On a basic $1 Million commercial loan, at 10.5%, the payment is $9,441. At 6.5%, that same $1 Million loan has a payment of only $6,752. That is a $2,689 difference per month. For a business with 10% profit margins, that is an extra $26,890 monthly sales. In a time of competition and decreasing margins, this can be the difference between SURVIVING or THRIVING!

Take advantage of these rates. If you are a small business and own your building that you bought with an adjustable SBA 7A loan, e-mail Commercial Capital Limited at Commercialcapital@newtomedia.com, and let me crunch the numbers and see how much you can save. It costs nothing to let me do that for you, and the savings may surprise you. The inflation numbers have been coming down, but a significant portion of that was gas prices tumbling since June, and prices started increasing in January at the pump. 

Additionally, there is only so much inflation that will come down, in my opinion, with wage inflation still going strong and wages making up the greatest cost for almost every company that sells a good or service. If inflation stays the same or starts inching back up, these treasury rates may go back the other way. So don’t delay, and e-mail Commercial Capital Limited at Commercialcapital@newtomedia.com today to crunch the numbers and see how much you can save. It’s 5 minutes that can change the game for your business.