September 27, 2021

Delaney Sexton
Contributing Editor

Main Street Monday – 7(a) Fee Waivers are Finished for the Fiscal Year

As of September 23rd, funding from the CARES Act was exhausted. 7(a) loans will now be charged with a guaranty fee and servicing fee going forward. A lender received an email from the Citrus Heights Loan Guaranty Processing Center sharing this information, but it stated that the 90% guaranty will stay in place until September 30, 2021.

For eligible borrowers, the CARES Act would cover up to six months of payments with a cap of $9,000 a month. Guarantee fees and servicing fees were covered, and the guarantee was increased from 75% to 90% on all 7(a) loans up to $5 million. This procedural change was set to end on September 30th or once the funds were depleted, whichever occurred first.

After the end of the fiscal year, the maximum guarantee for 7(a) loans of $150,000 or less will return to 85%. 7(a) loans that are more than $150,000 have a guarantee of up to 75%, and 7(a) Express loans carry a maximum 50% guarantee.

The temporary SBA Express loan increase of $1,000,000 will revert to $500,000. All Express loans made to veteran-owned businesses will have zero upfront guaranty fee. In the new fiscal year starting on October 1st, all 7(a) loans that are $350,000 or less will have no upfront guaranty fees or annual service fees. For loans above $350,000, the annual fee will range from 0.49-0.55%. The guaranty fee for loans with a maturity of twelve months or less will be 0.25%, and for loans with a maturity that exceeds twelve months, the fee will range from 2.77-3.75%.

There will be an additional guaranty fee for any extensions of short-term loans or any loan increases. If two or more SBA-guaranteed loans for an applicant are approved within ninety days of each other, the guaranty fee and percentage will be determined based on the aggregate amounts of the loans. Lenders are not able to split loans with the purpose of avoiding fees.

Source:
SBA Procedural Notice