SBA Guarantee Fee Being Eliminated in October

Beginning for loans authorized (Small Business Administration (SBA) approved) on or after Oct. 1, 2007, the SBA guarantee fee of one-half percent will be eliminated. This is the up front, one-time fee paid by the borrower for a 504 loan, NOT the bank fee, which is paid on the first mortgage amount.

The on-going borrower fee (paid annually) goes from 1.8 basis points (0.00018) up to 2.1 basis points (0.00021). This is an increase of 0.3 basis points, or 0.00003, an insignificant increase to the borrower.

Overall, these two fee changes will result in a real decrease in the cost of the 504 program to borrowers. Reduction in fees each year but one since the 504 program went to zero subsidy in FY 1997 is a testament to the hard work and quality lending of all involved with the 504 program.