Federal Stimulus Program and SBA Loans
The U.S. Small Business Administration (SBA) recently announced several program changes as a result of the American Recovery and Reinvestment Act of 2009 that was signed into law by President Obama on February 17, 2009.
One change temporarily reduces fees for borrowers on 504 Certified Development Company loans approved February 17, 2009 or later. Depending on loan volume in the 504 program, SBA estimated it will be able to reduce these fees on approved loans through approximately December 31, 2009 or until funds provided through the Act are exhausted.
Prior to the act, total fees charged on the GSBDC/SBA 504 loan was 2.16%. As a result of the act, these fees have been reduced by 1.50%.
For example, given a loan request of $500,000, GSBDC would traditionally finance $200,000 or 40% of total project costs. In this case, fees of 2.16% on $200,000 ($4,320) would have been added to the borrowed amount. These fees have been reduced by 1.5% resulting in a SAVINGS OF $3,000 in this example.
Example:
$200,000 x 2.16% = $4,320
Reduced by 1.5% = $3,000
New Fee = $1,320
In addition to the fee elimination, SBA 504 20-year loans are at their lowest rate since the program's inception in 1986. Projects funded in May 2009 carried an interest rate of 5.37%.