Sba Updates 504 Loan Program Fees For Fy 2020

by Rino Abdulah Mei 24, 2023 Posting Komentar

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Introduction

The Small Business Administration (SBA) has recently released updates on the fees associated with its 504 loan program for the fiscal year 2020. This is good news for small business owners who are looking to secure funding for their projects. The 504 loan program offers long-term, fixed-rate financing for the acquisition or expansion of commercial real estate or major fixed assets. In this article, we will discuss the changes in fees and what they mean for small business owners.

Background

The SBA 504 loan program is designed to help small businesses with long-term, fixed-rate financing for major fixed assets such as commercial real estate or equipment. The program is designed to provide financing for up to 40% of the total project cost, with a maximum loan amount of $5 million. The remaining 50% of the project cost is financed by a commercial lender, and the borrower must provide at least a 10% down payment.

What are the Changes in Fees?

The SBA has announced that it will be reducing the fees associated with its 504 loan program for the fiscal year 2020. This means that small business owners will have access to more affordable financing options. The fees for the 504 loan program are broken down into two categories: upfront fees and ongoing fees.

Upfront Fees

The upfront fees for the 504 loan program include a one-time guarantee fee and a one-time servicing fee. These fees are based on the size of the loan and are typically financed as part of the loan. The guarantee fee will be reduced from 0.5% to 0.25% of the total loan amount, while the servicing fee will remain unchanged at 0.375% of the outstanding balance.

Ongoing Fees

The ongoing fees for the 504 loan program include an annual servicing fee and a fee for prepayment. The annual servicing fee is based on the outstanding balance of the loan and is typically paid monthly. This fee will be reduced from 0.625% to 0.375% of the outstanding balance. The fee for prepayment will remain unchanged at 2% for the first year, 1.5% for the second year, and 1% for the third year.

Impact on Small Business Owners

The reduction in fees for the 504 loan program will have a positive impact on small business owners who are looking to secure financing for their projects. The lower fees will make it more affordable for small businesses to access the financing they need to grow and expand. This will also make the 504 loan program a more attractive financing option for small business owners who are looking for long-term, fixed-rate financing.

Conclusion

The SBA's updates on the fees associated with its 504 loan program for the fiscal year 2020 is good news for small business owners. The reduction in fees will make it more affordable for small businesses to access financing for their projects and will make the 504 loan program a more attractive financing option. Small business owners should take advantage of this opportunity and explore the financing options available to them through the SBA 504 loan program.