Jobs, Inflation, and Iran Lead to Rise in 504 Rates

NADCO, the trade association for the nation's Certified Development Companies (CDCs), has released the SBA 504 fixed interest rates for June 2026. Eagle Compliance, the Fiscal Agent for the SBA 504 Loan Program, responsible for the marketing, pricing, and selling of the debentures sold to investors to fund the SBA 504 Loan Program, stated that June saw SBA interest rates rise due to strong job numbers, inflation, and a continued uncertainty surrounding the conflict in Iran.


According to Eagle Compliance, a week before the SBA bond sales:


Stronger Jobs Growth, Higher Yields, Weaker Stocks


Preliminary jobs data leading up to Friday’s Non-Farm Payroll report was positive, and then the report of 172,000 jobs for May blew past the consensus number of 85,000, triggering a selloff in equities and Treasuries. Not only was the May number strong, but March and April were revised upward by 93,000, resulting in a three-month average of 188,000 jobs, the best since May 2024. The Unemployment Rate remains at 4.3% as more people joined the workforce, with 61.8% of Americans now working or looking for work.


Treasuries sold off, led by the two-year Note, as that is the most sensitive security to any policy change, and at 4.16% it is yielding 41 bps more than the upper end of the Fed’s target range of 3.50%-3.75%, a clear indication that the market does not expect a rate cut anytime soon. What this means for the new Fed Chairman, Kevin Warsh, is that it will be more difficult to advocate for a dovish policy against a backdrop of higher inflation, strong job growth, and a stock market where 98% of S&P 500 companies have reported 1Q2026 earnings per share that are up 29%. His first meeting as Chairman is June 6-7, and the futures market predicts no change in policy but does assign a 50% chance of a rate hike to 3.75%-4.0% at its December 9 meeting. That is six months away, and still the current level of the two-year Note at 4.16% would still be higher than that upper band rate.


Further out, the curve of the ten-year benchmark Note is at 4.54%, 20 bps higher than when the 504 program priced its May debentures and offering less premium for investors vs. the two-year Note when measured by the slope of the Treasury curve. That spread, or difference between the 2-year and 10-year Treasury, is now +38 bps, its tightest level since shortly after the April 2, 2025, Liberation Day announcement of tariffs.


The Benefit of Lower Rates


US debt as a percentage of GDP is back to 1940’s levels, and interest payments are a big part of it. The cost to the Treasury has increased from 1.5% of GDP in 2021 to more than 3% today, and the US deficit is running at nearly 6% of GDP. It has been reported that the current $39 trillion debt burden increases by $1 trillion every 163 days and questions the sustainability of this trend. The Congressional Budget Office estimates that if deficits don’t decrease, the cost of debt to GDP will increase to 4.6% by 2036.


President Trump is aware of this, and that is the reason he advocates for rate cuts not just to promote economic growth but also to reduce government borrowing costs, but with solid job growth and robust corporate performance, rates are unlikely to come down until inflation does.


In Other Markets


Bitcoin has stumbled as retail investors have departed for the AI-driven stock market. Down as much as 5.5% on Thursday and 14% on the week, the crypto is at $61,500 after trading as high as $125,000 in October. Some recent pressure is the result of Strategy selling part of its holdings to fund payments to holders of its preferred stock.


Strategy, the world’s largest corporate Bitcoin treasury company, had raised $10.2 billion recently to finance Bitcoin purchases by selling a type of preferred perpetual stock known as Stretch that pays annual dividends of 11.5% but has no potential upside linked to the stock market.


Strategy has been a buyer of Bitcoin since 2020 with $6.4B in holdings, and this was just their second sale ever and consisted of just 32 bitcoins for a total of $2.5M. Not significant, but perhaps an indication of more sales, especially if funds are needed to pay holders of their stock. With an approximate cost of $67,000 to mine one Bitcoin, its market is upside down for now.


After declining 4% on Friday, the Nasdaq is preparing for SpaceX, Anthropic, and OpenAI to launch IPO’s, and SpaceX in particular will be massive with its self-evaluation amounting to $1.7 trillion.


Following the bond sales, Eagle Compliance reported:


Excellent Sale, Not Sure I Like That New Tone Of Yours!


As we moved toward the June SBAP sale, a distinct shift in the tone within the fixed income markets was noticeable. The recent Non-Farm Payrolls report had revealed significantly stronger-than-expected job gains, and prior month gains were also revised upward. Geo-political conflicts continued abroad with little hard or prolonged evidence of abating anytime soon. These factors led many to believe that the chance of an additional FOMC decrease in rates during 2026 was highly unlikely; in fact, the probability of an increase in rates during their October meeting was now at 51%, and at 70% for their December meeting. Soon-to-be-released economic indicators included the well-watched CPI (Wednesday) and PPI (Thursday) reports. From the prior month, U.S. Treasuries had increased significantly in yield across the curve. The 10-Year yield was 4.52%, up 18 bps month over month. The U.S. Treasury 2s/10s, 5/10s, and 10s/30s points on the yield curve had once again flattened month over month for a total of 9 bps, 9 bps, and 12 bps, respectively. Comparable ACMBS issues had maintained spread levels month over month, while corporate credit had improved mildly. With these factors in mind, it was decided that the suggested initial pricing spread on the 20-Year debenture and 25-Year debenture would be +48 bps to the 10-Yr. U.S. Treasury Note, the same levels used for the May pricing.


Investor response to the SBAP $28.046 million 20-Year was immediate and very positive; for the SBAP $564.461 million 25-Year, it was also very good. Each issue received investor interest (orders) well in excess of the par amounts offered. Given the very good reception on each issue, it was decided that the pricing spreads could be narrowed by 3 bps on the 20-Year and by 2 bps on the 25-Year. The 20-Year debenture was priced at a spread of +45 bps (lowest since February 2022), the 25-Year debenture was priced at a spread of +46 bps; each to the U.S. Treasury 10-Year (3 bps and 2 bps narrower on the 20-Year and 25-Year, respectively, from the May pricing). The June debenture rate for the 20-Year was 4.97%, and for the 25-Year it was 4.98% (15 bps and 16 bps higher, respectively, than the May pricing). The 25-Year rate is 37 bps under the program life average of 5.35%, and the spread over Treasury (+46) was 32 bps below its program life average of T+78.


On Wednesday, the CPI report revealed a 0.5% increase in May, which was expected; year-over-year, consumer prices jumped 4.2%, also as expected, marking the largest annual gain since April 2023. Excluding food and energy costs, the core CPI rose 0.2% in May; year-over-year, the core CPI climbed 2.9%. Thursday’s release of the PPI report revealed a 1.1% increase in May, well surpassing the 0.7% gain expected, which follows a similar rise the month prior; year-over-year, producer prices soared 6.5%, marking the largest increase since November 2022. Excluding food and energy costs, the core PPI rose 0.4% in May, a tenth of a percentage point less than expected; year-over-year, the core PPI climbed 4.9% for the second consecutive month. Fresh multi-year highs in consumer and producer prices underscore consumer pain resulting from disruptions in the global energy market. Although the American consumer has proven rather nimble and resilient thus far, such resilience is not indefinite. Eventually, higher prices will further slow and, if sustained, break the growth profile of the domestic economy.


Week over week, U.S. Treasury yields decreased slightly, with the UST 5-year and 10-year yields at 4.20% and 4.48%, respectively, down 7 and 4 basis points, respectively. Equity indices were relatively unchanged week over week. Next week, all eyes and ears will likely be focused on Wednesday’s FOMC announcement, which, as mentioned above, is not unlikely to result in any rate change. It will be Kevin Warsh’s 1st post meeting press conference as Chairman, which could prove interesting and perhaps revealing.

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Despite the recent rising rates, SBA 504 loans continue to be very attractive, as it reduces the down payment on commercial real estate projects to as low as 10% and provide a 20 or 25-year fixed rate for up to 40% of the borrower's financing need.


For more information about the SBA 504 loan program, visit sedacogldc.org.


20-yr Rate:

Standard: 6.17%

Refinance: 6.17%

25-yr Rate:

Standard: 6.12%

Refinance: 6.12%

10-yr Rate:

Standard: 5.88%

Refinance: 5.92%

SBA Expands Access to 504 Program

Major Update for SBA 504 Financing – Effective July 4, 2026


The U.S. Small Business Administration has announced a significant change that will expand access to capital for small businesses nationwide - and especially those here in Pennsylvania.


What’s New?


Eligible borrowers will now be able to combine SBA 7(a) and 504 loans for up to $10 million in total financing, doubling the previous combined limit of $5 million.


Why It Matters


This change provides:

  • Greater flexibility to pair long-term fixed-rate financing (504) with working capital (7a).
    
  • Increased access to capital for growth, expansion, and equipment investment.
    
  • New opportunities for capital-intensive industries, including manufacturing, logistics, and construction.


This is one of the most impactful enhancements to SBA financing in recent years - expanding funding capacity to the highest level in the program’s history.


If you’re planning a project or want to understand how this new flexibility could benefit your business or your clients, let’s connect.

Reduced SBA Fees for Manufacturers

As part of the White House's "Made in America" initiative, the SBA has announced that, effective October 1, 2025, SBA 504 loans to manufacturers (NAICS sectors 31-33) will have the upfront SBA Guaranty Fee and the annual SBA Servicing Fee reduced to 0%. For April, the fee reduction resulted in a 25-year fixed rate of 5.70% compared to the regular 5.95% for non-manufacturers.

 

What does this mean for manufacturers? For a $2,500,000 purchase of real estate where the SBA 504 loan is for $1,000,000:

 

  • Up front savings from SBA Guaranty Fee - $5,000
  • Estimated monthly payment savings over the life of the loan - $37,400

 

These fee reductions apply to SBA-approved loans between October 1, 2025, and September 30, 2026.

Equip Your Team. Elevate Your Lending.

Do you have new members of your commercial lending team?


Are you looking for ways to better compete for deals?


Has it been a while since you partnered with SEDA-COG?


Now is the perfect time to explore fresh ways to support small businesses. Our Economic Development Loan Programs are designed to help you, as a commercial lender, find possibilities for your clients—fueling expansion, job creation, and long-term success.


Connect with SEDA-COG today to schedule an opportunity, whether it's a one-on-one discussion or a presentation to your lending team, to show how these programs can help you and your clients seize new possibilities.

SBA 504 Refinancing

Lenders, are your small business clients worried about rates? Are they coming up on an interest rate re-set on their loan? If so, the SBA 504 loan may provide a solution. The SBA 504 loan can refinance eligible real estate and production equipment debt, including existing SBA 504 and 7a loans. Depending on the amount of equity in the asset(s) securing the loan, a refinancing might also include money for eligible business expenses such as wages and salaries, utilities, inventory, accounts payable, and to reduce or pay off their line of credit balance.


Some of the requirements to refinance existing debt with an SBA 504 loan include:


  • The business must be at least two years old.


  • The debt is at least six months old.


  • Payments have been current for the past six months.


  • At least 75% of the original loan amount had to be used for eligible SBA 504 fixed assets for the business (real estate and/or long-term production equipment), with the remainder for general business purposes.


  • The current appraised value of the asset(s) securing the loan exceeds the amount of debt by at least 10%.



  • The refinancing offers better terms than the existing debt.


Click here for more information on refinancing debt with an SBA 504 loan or contact one of our loan officers.

SBA 504 Loan Calculator

Want to know what the financing for a potential SBA 504 deal would look like? Check out our SBA 504 Loan Calculator, which can be used to estimate the financing and monthly payments for an SBA 504 project.

SEDA-COG Loan Matrix

Looking for a quick guide that outlines the different loans available through SEDA-COG? We have put together a one-page resource that provides eligibility information, use of funds, loan amounts, and much more.

 

You can download the guide here.

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SEDA-COG's Business Finance Program serves the entire state of Pennsylvania for the SBA 504 Program.

 

For PIDA and SEDA-COG loans, we cover an 11-county area in central Pennsylvania, including Centre, Clinton, Columbia, Juniata, Lycoming, Mifflin, Montour, Northumberland, Perry, Snyder, and Union counties.


For more information, visit seda-cog.org/business-loans or sedacogldc.org.


Doug Wilburn | Director

570-522-7338

dwilburn@seda-cog.org


John Reichard | Senior Relationship Manager II

570-522-7251

jreichard@seda-cog.org


Brooks Luzier | Relationship Manager

570-754-8554

bluzier@seda-cog.org