January 2010
SBA 504 Fee Elimination Extended
- Initial extension set until 2/28/2010
- Further extension possible until 12/31/2010
In Mid December 2009, the Small Business Administration announced additional funding has been made available to pay the majority of fees for new SBA 504 debentures. Projects will qualify for a fee elimination if their loan is approved by February 28, 2010 and legislation is being proposed that may ultimately extend the fee elimination period until the end of 2010.
SBA 504 debenture fee eliminations were originally implemented in 2009 in order to spur business investment and job creation through the American Reinvestment and Recovery Act. The third party lender fee (0.5%) and debenture processing fee (1.5%) are the two fees being temporarily eliminated, reducing total fees from about 2.80% of the SBA 504 loan amount to just 0.65%.
Current 10-Yr Fixed Debenture Rate: 4.90%
Current 20-Yr Fixed Debenture Rate: 5.79%
Current Fee Structure Typical Fee Structure
Debenture Fee 0.65% 2.8%
(% of loan amount)
Closing Costs $3,000 $3,000
(cost per loan)
Companies have at least until February 28th to lock-in these attractive interest rates for 10 or 20 years on up to 40% of their project costs and still receive the fee elimination, but projects need to start working with EDC Finance Corporation prior to February 1st in order to assure enough time for loan review and approval.
Beyond the debenture fee elimination, SBA 504 loans continue to offer the benefits of long term fixed rates, subordinate lien positions to bank financing, and equity injections as low as 10%.
Please visit the SBA 504 section of the EDC Finance Corporation website for more information on the SBA 504 program or call John Biemiller or Lyle Hosler at (717) 397-4046 to discuss project specifics.
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