Borrowers will have the following two interest rate options for new loan applications:
- Fixed interest rate for the full term of the loan (up to a fifteen-year period). The applicable rate for new approvals would be calculated each quarter and set at the ten-year treasury yield +150 basis points, with a floor of 2.25%. Based on the current ten-year treasury yield, applicants would have the option of a fixed interest rate of 3.50% for the life of the loan.
- Fixed interest rate for a seven year period set at the ten-year treasury yield. After seven years, the rate would be reset to the ten-year treasury rate. The reset rate would be limited to a 200 basis point increase/decrease from the original approval rate. The reset rate would be fixed for the duration of the loan. For example, because the ten-year treasury yield is below the floor*, the rate would be fixed for seven years at 2.25%. After seven years from loan closing, the rate would be reset, based on the ten-year treasury. That reset interest rate could not go lower, because of the interest rate floor. The reset interest rate would be capped at 4.25% (200 point increase) and would be fixed for the remaining term of the loan.
* An interest rate floor of 2.25% remains in place and applies to all new loan approvals as well as rate resets.
Other Programs Rates are as follows:
Small Business First (SBF) 1.50
Machinery & Equipment Loan Fund (MELF)1.50
First Industries Loan (FIF) 2.75
These rates are effective until June 30, 2013