October 24, 2013
Written by Mark Sanchez
The SBA eliminated the upfront 2-percent fee, plus an ongoing monthly service fee for loans of $150,000 and less, in hopes that it will make it easier for smaller businesses to access the credit they need to grow, said Brian Picarazzi, senior area manager for the SBA’s regional office in Grand Rapids.
The SBA made the change for the new 2014 fiscal year that started Oct. 1 based on what it has been hearing from small business owners. Waiving the fee is meant to lower the cost of borrowing for smaller businesses, Picarazzi said.
“They’re saying, ‘That’s where we still have an issue for credit … the $50,000 to $70,000 loans,’” Picarazzi said. “This is meant to make those loans more palatable for the business owners, and they can put that money (from the lending fees) back into their business.”
Based on the volumes through August, the average SBA 7(a) loan in Michigan is about $304,000. Nationally, the average 7(a) was about $379,000, according to SBA data released just prior to the end of the 2013 fiscal year on Sept. 30.