Your amortization schedule will provide accurate information regarding interest and fees as long as payments are paid in a timely manner. Also, you will receive a notice by January 31 itemizing interest and fees paid for the prior year.
Yes, but there is a pre-payment premium for the first 10 years of your loan. It declines each year. You can minimize the interest due by pre-paying your loan the month before your semi-annual date.
Generally, your first trust deed loan from a bank or other lender has a higher interest rate than the SBA 504 loan. If you decide to refinance this first mortgage, CDC will subordinate your SBA loan to a straight refinance of your first trust deed loan. Cash-out may be allowed if the proceeds are used for building improvements. CDC charges no fees for this service.
If you are selling the building, a qualified buyer can assume your loan for a $1,000 assumption fee. The pre-payment penalty does not apply in this instance.
Your payment includes fees being paid to SBA, Central Servicing Agent and CDC (that’s us). These fees are adjusted downward at 5-year intervals.
The rate on the loan is determined approximately one week prior to the date the loan is funded and is based on current market conditions, which fluctuate. Typically they follow the trends of treasury rates. The loan is pooled with all of the other 504 loans funded in the same month and sold in the form of debentures.