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As Some Help on SBA Loans Ends, More is on the Way

The SBA's waiving fees on certain government-guarantee loans

The stimulus funds providing fee relief for certain Small Business Administration-backed loans just ran out at noon on Wednesday, a day before the program was due to sunset on September 30, 2021. But there are still extra benefits available to small business borrowers.

On Sept. 7, the SBA issued two policy notices offering details on its plan to waive certain borrower fees on 7(a) loans of $350,000 or less and reduce fees on 504 loans, even after Thursday. In light of the continued difficult position in which many businesses -- particularly in-person operations -- still find themselves, the agency is opting for an extension of the fee waiver.

Per the policy notices, the SBA's fee waiver on 7(a) working capital loans applies to the guaranty portion of a loan, so borrowers with loans of $350,000 would save $7,875. The fee structure for 504 loans is slightly different. They have upfront and ongoing fees which are not related to the guaranteed portion of the loan. While the upfront fee of 50 basis points has not changed, the annual service fee has been reduced from 45.17 to 24.75 basis points. The new fee structures will be effective for the SBA's fiscal year 2022, which starts Oct. 1, 2021 and lasts through Sept. 30, 2022. This means that there is a slight gap for which payments aren't clearly subsidized; it isn't clear if borrowers in the interim will be assessed fees or not, but lenders should not pull loan numbers during this gap.

Please select this link to read the complete article from Inc.

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