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SBA Hot Topic Tuesday: 7(a) and 504 Fees Effective October 1, 2016

SBA Hot Topic Tuesday: 7(a) and 504 Fees Effective October 1, 2016

By Bob Coleman
Editor, SBA Hot Topic Tuesday

5000-1389

For 7(a) loans greater than $150,000 (except certain loans to veterans) approved in FY17

  1. The annual service fee will be increased to 0.546% (54.6 basis points) of the guaranteed portion of the outstanding balance of the loan. Lenders will need to manually adjust this fee in the current Authorization Wizard.
  2. The upfront guaranty fees will continue to depend on the loan amount and the maturity of the loan and are unchanged from FY16.
    a. For loans with a maturity that exceeds 12 months, the applicable guaranty fees remain:
    For loans of $150,001 to $700,000: 3% of the guaranteed portion
    For loans of $700,001 to $5,000,000: 3.5% of the guaranteed portion up to $1,000,000 plus 3.75% of the guaranteed portion over $1,000,000
    b. For loans with a maturity of 12 months or less, the guaranty fee remains 0.25% of the guaranteed portion.
  3. For guidance on when these fees are due, see SOP 50 10 5(H), Subpart B, Chapter 3.

For 7(a) loans in the amount of $150,000 or less approved in FY17

  1. The annual service fee will be increased to 0.546% (54.6 basis points) of the guaranteed portion of the outstanding balance of the loan. Lenders will need to manually adjust this fee in the current Authorization Wizard.
  2. The upfront guaranty fee will continue to be zero for all 7(a) loans in the amount of $150,000 or less. Since the upfront guaranty fees charged to the lenders will be zero, lenders may not assess the borrower for any guaranty fee in connection with these loans. Lenders will need to manually adjust these fees in the current Authorization Wizard.
  3. If two or more SBA-guaranteed loans are approved within 90 days of each other, the guaranty fee is determined based on the aggregate amount of the loans. Thus, if the total amount of multiple loans approved within 90 days is greater than $150,000, the normal fees will apply. This represents no change to current policy.

NOTE: Lenders are not permitted to split loans for the purpose of avoiding fees.

For 504 loans approved during FY17
The upfront guaranty fee that SBA is authorized to charge 504 borrowers will continue to be zero in FY17. The annual service fee is reduced to 0.697% (69.7 basis points) of the outstanding balance of the loan.

For 504 Debt Refinance loans approved during FY17
The upfront guaranty fee that SBA is authorized to charge 504 borrowers will continue to be zero in FY17. The annual service fee is reduced to 0.697% plus 0.034%, for a total of .731% (69.7 basis points plus 3.4 basis points) of the outstanding balance of the loan.

Read SBA Information Notice 5000-1389

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