Attention commercial lenders…you can help your business borrowers weather 2026 by leaning into SBA 504 now. December 2025 brought two developments lenders should treat as an invitation, not just background noise: the Federal Reserve trimmed policy rates and signaled a gentler path into 2026, and the SBA introduced fee relief aimed squarely at manufacturers. Together, these tailwinds make SBA 504 an especially powerful tool for commercial lenders who want to originate more loans while giving their business clients durable stability heading into next year.
Quick snapshot (the facts that matter)
- The Federal Open Market Committee lowered its policy rate on December 10, 2025, and released updated projections that imply a slower, data-dependent easing path into 2026. That reduces short-term funding pressure and improves borrowing conditions for businesses.
- The SBA waived certain fees for manufacturing borrowers for FY2026 (effective Oct 1, 2025 through Sept 30, 2026): upfront guaranty and annual service fees on many 504 manufacturing loans are 0%. That materially lowers the cost of capital for manufacturers.
- The 504 program offers long-term, fixed-rate financing for major fixed assets (owner-occupied real estate, long-life equipment) that promotes growth and job creation — precisely the kind of stability many businesses will pay for in uncertain times.
Why this matters to your bank (or credit union)
- Make more loans without taking more risk. 504 projects typically pair a conventional bank loan (first lien) with a CDC/SBA-backed second lien that holds a small local lender portion while making the major fixed-rate portion low-cost and long term. That structure reduces borrower payment shock, improves debt service coverage, and increases the chances of loan performance over multi-year horizons.
- Price sensitivity just changed — especially for manufacturers. Fee waivers directly reduce up-front borrower costs for manufacturing deals, making larger projects and equipment purchases more affordable. That creates a ready pool of near-term manufacturing demand you can capture.
- Lower Fed rates ease borrower cash flow pressure. The December rate cut and the Fed’s projections mean businesses are likelier to refinance, expand, or move forward on capital projects they delayed earlier in 2025 — and they’ll be looking for stable, predictable payment structures. 504’s fixed-rate tenure matches that need.
Tactical playbook for commercial lenders
- Train relationship managers on SBA 504 basics. Short workshops or one-pagers that explain how a 504 combo (your bank + CDC + SBA) impacts LTVs, payments, and borrower cash flow will remove the “I didn’t know we could do that” barrier.
- Target manufacturing customers immediately. Use your commercial portfolio analytics to find borrowers in NAICS 31–33 who have delayed equipment or facility projects. With the FY2026 fee waivers, many of these deals become much more attractive.
- Create 504 product packages for underwriting teams. Pre-packaged credit terms that show how a 504 second lien reduces risk and improves debt service ratios speed approvals and reduce friction.
- Co-market with your local CDC. CDCs are your on-the-ground SBA partners — promote joint webinars, lunch-and-learns, and case studies that demonstrate total cost savings and long-term cash flow benefits.
- Adjust pricing and cross-sell offers. Consider promotional relationship pricing for the conventional portion when paired with an SBA 504 structure — you win the commercial relationship and retain the fee income from deposit/cash-management cross-sells.
- Run a proactive outreach campaign. Email/phone campaigns to prospects with “Is your facility ready for 2026?” messaging, highlighting 504’s long fixed rates and the SBA’s manufacturing fee waivers.
- Build a fast-track play for $0-fee manufacturing deals. For straightforward manufacturer projects, develop an internal quick-route that gets conditional approvals in weeks (not months), capturing borrowers who might otherwise shop elsewhere.
Example (illustrative)
A $3.5M building + equipment project:
- Bank provides the first mortgage for working capital/portion.
- SBA 504 provides a low-cost, fixed-rate second lien for the CDC portion.
- Result: smaller monthly payment for the borrower, longer amortization, improved DSCR for your bank — and with manufacturing fee waivers the borrower saves immediately on upfront costs. (Numbers will vary by deal; use internal pricing tools.)
Objections you’ll hear — and how to answer them
- “SBA processes take too long.” → Build a relationship with a CDC and create an internal checklist. Many lenders report that standardized packaging and pre-approval steps reduce timeline friction dramatically.
- “We don’t specialize in manufacturing.” → Fee waivers and targeted outreach make manufacturers a high-ROI segment for 2026. Start with existing customers in NAICS 31–33 and scale from there.
- “Interest-rate uncertainty worries us.” → That’s exactly why fixed-rate 504 financing is attractive: it locks in long-term cost for borrowers, making their forecasts and debt service more predictable as monetary policy evolves.
Bottom line
December’s Fed action and the SBA’s FY2026 manufacturing fee relief create a timely window for commercial lenders: you can originate more, better-structured loans while offering your customers stability heading into 2026.
Position your teams, partner with your CDC, and launch targeted outreach to capture manufacturing and fixed-asset demand now — the economics and policy changes are stacked in your favor.
The strength of SBA 504 continues to shine through performance data, so you can trust the integrity of this long-standing program. And remember, Growth Corp is always here to provide ongoing SBA 504 loan support and training. So, whether you want to schedule a time to go over a potential project, estimate a payment, or set up training for your lending team, we’re here to help you reach your goals. Reach out to any member of our lending team today!