SBA extends fee waiver on small loans, expands relief to veterans

WASHINGTON – The U.S Small Business Administration announced on Wednesday that it has extended a fee-waiver on 7(a) loans of $150,000 and less and also extended and enhanced fee relief for SBA Veterans Advantage loans through Sept. 30, 2015.

The fee relief for 7(a) loans that began Oct. 1, 2013, were set to expire Sept. 30 of this year. Fees are based on the amount and maturity of each loan.

For SBA Veterans Advantage loans, the zero upfront guaranty fee on SBA Express loans to veterans of $150,000 up to $350,000 will remain unchanged. Also, the upfront guaranty fee for non SBA Express loans $150,000 up to $5 million will be reduced by 50 percent.

SPONSORED CONTENT

The many benefits of simple, coordinated healthcare

Kaiser Permanente combines health care and coverage in one connected system to maximize employee health and minimize employer costs.

The 7(a) Loan Program is SBA’s primary program for helping startup and existing small businesses with financing guaranteed for a variety of general business purposes. The SBA does not make loans itself, but rather guarantees loans made by participating lending institutions. Taxpayer funds are only used in the event of borrower default. This reduces the risk to the lender but not to the borrower, who remains obligated for the full debt, even in the event of default.

“We zeroed out fees on loans of less than $150,000 to any 7(a) borrower because we don’t want SBA fees to be an impediment to getting capital out to communities where it can make a game-changing difference, especially to our underserved communities, who use these small-dollar loans more frequently,” said SBA administrator Maria Contreras-Sweet, in a prepared statement.

“We also owe a debt of gratitude and so much more to our service men and women, and veterans who are the cornerstone of small-business ownership. This fee relief will continue to help veterans who grow their businesses, create jobs in their communities, and put their training and passion for our country to work in their neighborhoods,” she said.”

The most recent numbers available for fiscal year 2014, as of Sept. 12, show that the SBA guaranteed 28,806 loans of $150,000 and less for more than $1.74 billion, up from 23,337 loans and $1.34 billion in fiscal year 2013. The SBA said fee reductions on these loans resulted in almost $19 million in savings to small-business borrowers in FY 2013.

Seventy percent of all SBA loans made to veterans are $350,000 or less. Since its inception on Jan. 1 through Sept. 20, the SBA had guaranteed 153 loans for $38.9 million under Veterans Advantage. Fee relief for these loans resulted in savings to borrowers of about $571,000.