On August 29, 2023, the Small Business Administration (SBA) issued Information Notice 5000-848801, outlining changes in fees for all SBA 7(a) loans approved October 1, 2023, through September 30, 2024. The notice announced reduced SBA guarantee fees, also known as upfront fees, for 7(a) loans, resulting in significant cost savings for borrowers.
Except the Export Working Capital Program loans and SBA Express loans made to veteran-owned businesses, the fiscal year 2024 upfront fee, based on gross loan approval amount, including guaranteed and unguaranteed portions, will be:
For loans with a maturity that exceeds 12 months, the Upfront Fees are:
- For loans of $1,000,000 or less: 0.00%
- For loans of $1,000,001 to $2,000,000: 1.45% of the guaranteed portion of the loan up to and including $1,000,000, plus 1.7% of the guaranteed portion of the loan over $1,000,000
- For loans of $2,000,000 and greater: 3.5% of the guaranteed portion of the loan up to and including $1,000,000, plus 3.75% of the guaranteed portion of the loan over $1,000,000
For 7(a) loans with a maturity of 12 months or less (Short-Term Loans), the Upfront Fees are:
- For loans of $1,000,000 or less: 0.00%
- For loans of $1,000,001 and greater: 0.25% of the guaranteed portion
What does this mean for borrowers?
Reduced guarantee fees for SBA 7(a) loans result in a more favorable financial environment for small businesses because it lowers the overall cost of obtaining a loan. Guarantee fees are typically charged by the SBA as a form of insurance against borrower default. When these fees are reduced, it means that borrowers have to pay less upfront, thus making financing more affordable and accessible.
Bottom Line
As an SBA Preferred Lender, we are steadfast in our commitment to providing small businesses with easier access to the capital needed to support their growth, economic development, and sustainability. If you’re interested in applying for an SBA loan, contact a member of our team today!
For more information regarding the fees charged when two or more loans with maturities greater than 12 months are approved within 90 days of each other, and when there is an increase in the original loan approval amount, please refer to Information Notice 5000-848801.
By Brana Webb in SBA Lending
