Stimulus Programs are Making SBA Loans Cheaper and Easier to Obtain
With the current economic conditions, there have been several changes made to the SBA Loan programs. The major provisions which affect borrowers are:
Guarantee Fees are Waived The guarantee fees for both the SBA 7a and 504 programs are currently being waived. This means a substantial savings to borrowers on closing costs - for instance, on an SBA 7a loan of $1,000,000, the borrower will save $26,250 on this fee.
Better Rules for Refinancing The rules for refinancing existing debt have been loosened to allow lenders and borrowers more flexibility. Many companies are facing term loans that their existing lender will not renew. Or are locked into fixed rate loan at higher rates than are currently available. Or have a shorter amortization or term than is justified. Several technical changes in the SBA regulations make it much easier to refinance all kinds of debt.
Lenders Receive Higher Guarantees Lenders are able to receive higher guarantees on their SBA loans, providing additional incentives for them to make loans. Although lending is still much tighter than prior to the recession, there are more lenders coming into the market and more lenders willing to be more aggressive in their lending policies due to the higher guarantee that now is available.
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