SBA 504 loan Recovery Act fee waivers has ended

[Alan Bussey]

NADCO, the national association for SBA 504 fixed rate program lenders has made the final call for application packages to be submitted by the CDC's to SBA to take advantage of the 504 loan fee waivers under the Recovery (economic stimulus) Act. The application packages must be received by the 504 processing center by tomorrow, November 20th. The response to the fee waivers under the Recovery Act from appliants has been very good and the original appropriation for the 504 fee waivers is nearly expended.

For a car wash with a $3MM Total Project Cost the origination fee waivers/discounts has been about $21,000 since the beginning of the American Recovery and Reinvestment Act on February 17th.

The Act officially ends on February 17th next year, 2010. NADCO and SBA are working with Congress on ways to add more appropriation to continue the 504 fee waivers through the official end date, but so far this has not happened.

Still, for those 504 2nd lien loans, usually 30 to 35% of a car wash project cost, the effective fixed interest rate is just 5.0% for the entire 20-year term. This is about 1.25 to 1.5% less than interest rates otherwise available in the loan market today. So, the 504 fixed rate loan program will continue to be excellent for car wash loan applicants even without the fee waivers.

 

[Alan Bussey]

Addendum to previous post.

Also since February 17th, the Guarantee fee for "7a" loans, typically carrying a floating interest rate, has been 0%. This guarantee fee waiver is also coming to an end.

Quoting from the SBA Procedure Notice dated 11/16/2009: "SBA projects that the Agency will have funds to support these two Recovery Act [7a fee waivers and 504 fee waivers] initiatives through late-November 2009."

Sometimes, approved 7a and 504 loans are withdrawn by applicants and/or lenders. This will free up some additional Recovery funds for newly submitted loan requets. Beginning on Monday, 11/23/2009..."Applications submitted as new Recovery Act loans will be processed up to the point of approval and then will be placed into a queue awaiting the availability of Recovery Act funds (the "SBA Recovery Loan Queue"). As Recovery Act funds become available, applications placed into the SBA Recovery Loan Queues will be funded in the order they were approved by SBA..."

SBA, the lender associations, and Congress are working to find additional funds to extend the fee waivers into next year. The key to getting the fee waivers is to keep moving forward with your car wash loan request and get a 7a or 504 application approved by the bank and submitted to SBA as soon as possible.