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SBA 504 Temporary Fee Elimination Provisions are in place.

For eligible loans approved through the SBA’s 504 Loan Program on or after February 17, 2009, SBA will temporarily eliminate two program fees: 1) Third-Party Participation Fees (.5%) and 2) CDC Processing Fees (1.5%).  For a one-million dollar transaction, the normal fees (90% financed - not including closing costs) would total $11,140.  Without these two fees, the total costs would amount to just $2,616, representing over a 78% reduction.  Because Coastal Business Finance’s $1,000 closing fee is well below the norm (most Certified Development Companies charge approximately $2,500), the total SBA related fees on this project would amount to just $3,616.

With these fee reductions and 504 rates at record low levels (March rate was 5.60%); borrowers leaning toward conventional financing may want to reconsider.

Refinancing?

We are still awaiting regulations that would allow refinancing to be part of a 504 Project.  The Stimulus Bill introduced the concept of allowing a 504 loan to be used for a limited amount (50%) of refinancing in a circumstance where a business is expanding. There is move afoot to remove the limit and we will let you know how that develops.

If you have any questions feel free to contact Brian Kearns at (805) 739-1665 or b.kearns@sbacdc.org.

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