SBA 504 Rates

504 effective rates for October were near the 6.25% Prime Rate (see chart below). The Fed, however, may hike the target Fed funds rate another 75 bps on October 21 to 4% (we quote the top of the target range), which would result in a 7.00% Prime Rate. If indeed the market-implied forecast for the peak Fed funds target is correct at 4.5% in 2023, and the economy slows materially, the T-note yield eventually may find a home fluctuating around the 4% level.

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Note: 10-year 504 loan fundings occur on an every other month basis. The above rate reflects the 10-year 504 rate for the September, 2022 funding.