October 5, 2021

Delaney Sexton
Contributing Editor

Hot Topic Tuesday – SBA Update on FY21 7(a) Fees for Loans Approved After CARES Funding Depleted

The SBA New York District Office sent an update on the 7(a) fee waivers and Section 1112 payments for new 7(a) loans in the fiscal year 2021. All 7(a) fee waivers and the raised guaranty were set to end on October 1st, and the appropriation for Section 1112 payments was expended.

There was some confusion about the 7(a) fees after some messages from SBA field offices and information in Etran stated that the CARES Act fee relief was expended on September 24th. This was inaccurate, so any lenders who received a message during that time indicating that fees would be due should disregard the message.

However, the funding did run out on September 29th. The SBA states, “Loans approved between the time stimulus funding expired and have an ‘approved pending funding’ status will be reviewed by SBA, and the lender will be contacted directly for those applicants who are impacted.” Loans approved after funding was depleted until midnight on September 30th will be subject to the SBA’s regular FY21 fees.

• The annual service fee will be 0.55% for all loans.
• 7(a) loans with a maturity of 12 months or less will be 0.25% of the guaranteed portion.
• Loans that are $150k or less and have a maturity that exceeds 12 months will be 2% of the guaranteed portion.
• If the loan is more than $150k to $700k will have a 3% guaranty fee.
• Any loans that are over $700k to $5 million will have a $3.5% guaranty fee plus 3.75% of the guaranteed portion over $1 million.

On September 23rd, the appropriation for Section 1112 payments was expended. “New loans made since then will not be eligible for payment relief. But loans approved before that date, but not yet fully disbursed, will receive the payment relief after they are fully disbursed,” shares the New York District Office.

Now that some of the SBA COVID relief has been discontinued going forward, the EIDL program still has roughly $150 billion (as of September 9th) in available funds. There is a $2 million cap on EIDL loans, and borrowers will not have to begin EIDL repayment until two years after the loan origination. The SBA has approved more than $270 billion in EIDL loans (as of September 29th).

Sources:
SBA 7(a) FY21 Fees
EIDL Program Data
SBA EIDL Press Release (September 9th)