SBA 504 Rate (October 2022) vs. Conventional Rates?
We finalized and signed a PSA today on a $450k condo (from $600k....).  All the drama is done (hopefully).

We've gone through underwriting at BoFa, and they've come back with $225k, at 6.84%, Fixed Rate, 25 Year Fully Amortizing, No Pre-Payment Penalty for their portion of the 504.

SBA portion is gonna be whatever the ten year treasury is at when the deal closes.

My credit is pretty good, we have a home equity line at prime + .19% from \~2 years ago.   I think we have a company credit line at prime + 1% (maybe sub 1%, never intended to use it, so I don't know the rate -- it's really for emergencies only).

I've seen a few lender folks on the board here.   With a conventional loan, could your bank beat 6.84% to the same terms...?

I'm having this same conversation with BoFa tommorow since our financials have been through underwriting, and I keep hearing conventional is cheaper.
[{"id": "isvf85f", "text": "Guessing owner occupied condo since its an SBA loan. 50% LTV conventional you should be looking at 5.75% - 6.25%. I'm closing around 5.10% for A paper clients and 6.0% for harder ones.\n\nProbably a prepay in there if you don't refi with the bank you'll be borrowing at. \n\nAdvantage to using a broker they can shop it for you at multiple banks at the same time and you're paying 1 point for good brokers as long as your file isn't difficult.", "replies": [{"id": "isvjukv", "text": "What would you think at 80% LTV?\n\nEasy file.   Our model does not like sinking cash into the deal", "replies": [{"id": "isw6yk8", "text": "Obs... missed the 1st and 2nd... long day\n\n80% strong deal you should still find around 6.25% right now. Not too large of a difference as you'll probably refi in 3-5 years. Do a cost savings breakdown with the prepay included in it.", "replies": [{"id": "isw7p2t", "text": "Awesome.  Thanks, I will model it!   (Could you DM me?  I'll send you our paperwork if you want to take a crack at our loan?  You are right the no-prepay from BoFa is kind of the kicker + they are waiving all closing costs + no origination fees + 2.99% promo for the first year).", "replies": [{"id": "isy6e8t", "text": "I'd suggest finding a broker in your area that can find you the right product and bank to work with you. \n\nThere's a lot of value once you're ready to refinance and/or expand to a larger place.", "replies": [{"id": "isy6ln1", "text": "Okay, thought I'd offer it up if you wanted to chase it.  I agree with you on the broker front, it's a ton of work chasing down the banks if you are doing this a one off to your primary business.", "replies": [{"id": "isy7ewv", "text": "No worries. \n\nI'm not here to get business just share what I can and learn at the same time.", "replies": [{"id": "isy7rw3", "text": "I had a call with Wells Fargo, as of today, 20 YR, fully amoritizing, unknown prepayment terms, 75% LTV, 7.2-8.1%!!", "replies": [{"id": "isykx1m", "text": "One other odd talking point:  I had a call with BoFa, and said \"fix the rate\"...  and they said they can actually beat their 504 rate with a fixed rate, 25 year / fully amortizing, 3 year prepayment penalty, 7(a)...   5.75% - 6.3%.\n\nRate promo for the first year and no closing costs or guarantee fees.\n\nReally, a 7(a)?    My rep said it beats their commercial pricing right now.", "replies": [{"id": "isz6qlk", "text": "You'll probably get better rates at community banks, but have to do all the work to get the file to them. Some will reject, some will give you shit pricing, and some will be competitive.\n\n7a will have a 5/3/1 prepay so if you decide to refi within that time frame then you need to calculate your \"actual rate\" by putting the prepay with the payments to figure it all out. \n\nWe're seeing some fixed rate 7a \"specials\" right now since normally they are adjustable rates. I've seen 6.5% + 2 pts specials that some banks are running at the moment.", "replies": [{"id": "itnjysi", "text": "Two shady community banks, brought back nothing. (I really have never had a positive experience iwth a community bank... theoretically it should work, but it never seems too since we are always a one off transaction)\n\nWe had a 10 / 25, 6.25%, 5/4/3/2/1 from a regional bank on the SBA 504.\n\nBoFa matched it, bunch of promo cash offsetting expenses, and went 25 year, fully amortizing, 6.5%.\n\nLet's hope 10 year treasuries don't go nuts on the SBA side for the next 3 months till this closes.", "replies": [{"id": "itshid6", "text": "Thats good man. Good work!\n\nI don't think the 10 year will tick up too much more. It's as high as it's ever been right now similar to 09-11.", "replies": [{"id": "itsurtb", "text": "We got the final letter from BoFa and they actually went down to 6.3% + promos; \\~5.8% / 25 year fixed, no prepay penalty.\n\nCiti said they would do a 15/15, 5.65%, with a 5/4/3/2/1 prepay.\n\nI think we are going to take the BoFa deal.   \n\nNo one is bringing up conventional right now and it sounds like it's in the 7%-8% from whenever I ask.", "replies": [{"id": "itv1me4", "text": "Congrats man! Now get everything in ASAP to close on time!", "replies": [], "depth": 14}], "depth": 13}], "depth": 12}], "depth": 11}], "depth": 10}], "depth": 9}], "depth": 8}], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "isvrp7o", "text": "It's not 50% it's 90% up front but the Community Development Corp places the 2nd 40% so the originator only carries the 50% in first position after debenture in 6-12 months but the debt service is still there. Plus there is an SBA annual servicing fee on them... 504s are not terribly attractive long term financing.", "replies": [], "depth": 2}], "depth": 1}]