WASHINGTON (10/2/14)--Fee relief for Small Business Administration (SBA) 7(a) guaranteed loans will be extended through fiscal year 2015, the agency announced Wednesday.
The relief was implemented last year and was set to expire Sept 30. The SBA also announced fee-relief measures for SBA Veterans Advantage loans will be renewed as well as enhanced. Both the extensions will remain in effect through Sept. 30, 2015.
Under the original fee relief for 7(a) loans that began Oct. 1, 2013, both the upfront guaranty fee and the annual servicing fee were reduced to zero on loans $150,000 and under. For loans larger than $150,000, the annual servicing fees paid by lenders will be 0.519% of the guaranteed portion of the outstanding balance of the loan.
The Credit Union National Association urged the SBA earlier this year to continue the fee relief beyond the original Sept. 30 expiration date (News Now March 18). CUNA's then-President/CEO Bill Cheney called the waiver "an effective way to increase borrower participation in this important SBA loan program."
SBA Administrator Maria Contreras-Sweet said the agency does not want its fees to be an impediment to getting capital out to communities, "where it can make a game-changing difference, especially to our underserved communities who use these small-dollar loans more frequently."
As of Sept. 12, the SBA had guaranteed 28,806 loans of $150,000 or more, totaling $1.74 billion, up from 23,337 loans and $1.34 billion in fiscal year 2013. This is an increase of 23.4% and 30%, respectively. Fee reductions on these loans resulted in almost $19 million in savings to small business borrowers in fiscal year 2013, according to the SBA.
For SBA Veterans Advantage loans, the conditions implemented Jan. 1, 2014--zero upfront guaranty fee to veterans on all SBA Express loans of $150,000 up to $350,000--will also remain unchanged for fiscal year 2015.
The agency also announced that, starting Wednesday, the upfront guaranty fee will be reduced by 50% for non-SBA Express loans from $150,000 up to $5 million. There is no reduction on the annual servicing fee for loans over $150,000.
According to the agency, 70% of all SBA loans made to veterans are $350,000 or less. As of Sept. 20, the SBA has guaranteed 153 loans for $38,861,900 under Veterans Advantage. Fee relief for these loans resulted in roughly $571,000 in savings.