October 3, 2011 was the first working day of the Government fiscal year. This year SBA has implemented fee increases to the SBA 504 loan program, which are detailed below:
On-going SBA Fee: The "Annual Fee" paid by borrowers on an ongoing basis to SBA will be increased from 0.749% to 0.9375% of the outstanding balance of the 504 loan. This represents an increase in the effective rate of 19 basis points for loans approved beginning in October 2011.
For loans made under the Small Business Jobs Act 504 Debt Refinancing Program, borrowers will pay a a slightly higher "Annual Fee" of 1.103% for loans approved beginning in October 2011.
One-time SBA Fee: The one-time guaranty fee will be increased from zero to .50% on all loans approved beginning in October 2011. This one-time fee is built into the SBA loan and is .50% of the the SBA loan amount.
Other notable changes include:
Expansion Debt Refinancing: To be consistent with the temporary refinancing rules, now only 85% or more (vs. 100%) of the proceeds of the debt to be refinanced, when paired with expansion, must have been used for 504-eligible purposes (acquisition of land or equipment or construction). In addition, the debt is eligible if it has been refinanced one or more times.
Leasing Part of a Building: The leased portion of a building may now be either commercial or residential. Remember that a tenant may only occupy 49% of an existing building purchase and 40% of a newly constructed building.
Financing Third Party Lender's OREO: The appraisal requirements for a project involving a lender's OREO are now the same as other 504 Loans. A liquidation valuation is no longer required and the use of proceeds is no longer limited to the lesser of liquidation value or the lender's cost.
Please keep in mind that these changes apply to new Authorizations dated after October 1, 2011. If an Authorization is dated prior to October 1, 2011, the fees will be determined by the government fiscal year when the approval was received, and are detailed in the Authorization.
