SBA Loan Fee “Discount” About To Expire

If you are going to apply for an SBA 504 loan then you might want to act quickly because the reduced SBA loan fees are not going to last long.  

SBA loan fees were reduced with a subsidy through the Recovery Act, but when the subsidy is gone the fees go back to pre-Recovery Act levels.  The lower fees have helped many business owners take advantage of the low rates and higher government guaranty of SBA loans and according to the SBA’s director of Financial Assistance, the subsidy will likely run out before the end of the year.  

Businesses taking out an SBA 504 loan this year have been able to avoid the 1.5% CDC fee and the .50% 3rd party lender fee and on a typical $2,000,000 project this has resulted in savings of $17,000.

Consider Applying Now to “lock-in” Lower Fees

If you have a project that you are getting close to getting off the ground you may want to apply for the loan now and get your SBA “authorization” (approval) before the subsidy runs out, because once you are approved you are eligible for the lower fees.

There is also a silver lining in at least one respect…these fees are usually financed into the loan, so while it is true that the higher fees will cost you more over the life of the loan –  it will not cost you more at closing.