SBA Commercial Loans - Status

Via the Obama stimulus package, SBA commercial loans are in for some significant changes, so it seems. As normal however, business insiders are still waiting to see exactly how the proposed changes will actually appear on the "street".

For borrowers, the most significant change is the elimination of the of the SBA fees, which are substantial, for a period of 18 months. For example on an SBA 7a loan the fee has been set at 2.75% of the guaranteed portion of the loan, which is currently 75% of the total loan amount. So on a $1,000,000 total loan, the guaranteed portion is $750,000. The fee applies to the $750k, not the full $1 mil. The 2.75% fee in this example would equal $20,625. This fee is now going away.

The guaranteed portion of the loan has also, apparently been changed. This is in an effort to further motivate/incentives banks to begin lending again. Basically the total loan amount would be completely guaranteed, giving banks more confidence that, in case of borrower default, they would get their capital back.

As soon as we have reliable word that the changes have been made, and that banks have adopted them, we will let you know, here via this blog.