SBA 504 Fee’s Are Reduced for FY2017
On Friday, September 16th, 2016, the U.S. Small Business Administration issued “SBA Information Notice 5000-1389” which provided information about fees for SBA 504 loans approved during FY2017 (Oct. 1, 2016 – Sept. 30, 2017). These changes are only applicable on loans approved on, or after, October 1st, 2016.
Last year, for FY2016, SBA changed the upfront guaranty fee that SBA is authorized to charge the SBA 504 borrowers that is normally included in the debenture fees from .5% to 0. This will continue to be zero for FY2017, however, there is an additional fee reduction for FY2017! The annual service fee on traditional SBA 504 loans is reduced from .914% to .697%, a reduction of 21.7 basis points! On the new 504 Refinance Program, the annual service fee is reduced from .958% to .731%, a reduction of 22.7 basis points! This annual service fee is figured into the overall effective SBA 504 interest rate for the borrower. In comparison, September’s 20 year effective interest rate on traditional SBA 504 loans was 4.082% fixed for the 20 year period. With this fee reduction, the 20 year effective rate would have been approximately 3.87% for September’s pricing!
The September overall effective rate on the new 504 Refinance Program was 4.136% fixed for the 20 year period. With this fee reduction, the overall September effective rate would have been approximately 3.909%!
This is great news for our Small Business Owners!
Give your MBFC Business Development Officer a call today for more details!