SBA has announced fee changes for the SBA 504 Loan Program during Fiscal Year 2019 that will become effective October 1, 2018.
Upfront Guaranty Fee
- This fee is increasing from zero to .50% for both standard and refinance 504 loans. This fee will be included in the 504 loan amount and is not an out-of-pocket cost. (NOTE: this is not the bank fee, which is paid on the first mortgage amount.)
Ongoing SBA Borrower Fee
- The Ongoing Borrower Fee for standard 504 loans is decreasing from 0.642% to 0.368% of the outstanding balance of the loan.
- The Ongoing Borrower Fee for refinance 504 loans is decreasing from 0.682% to 0.395% of the outstanding balance of the loan.
What This Means:
- The decrease in the Ongoing Borrower Fee results in a reduction in the overall effective interest rate by 0.28%.
- The reduced monthly servicing fees will offset the increase in the Upfront Guaranty Fee after two years.
Beginning October 1, 2018, the SBA 504 Loan Program will see some fee changes. Each year, SBA reviews the fees payable to the Agency by 504 borrowers and determines if any of those fees need adjusted to ensure the estimated subsidy costs of the program are being covered. These changes are applicable only for loans approved on or after October 1, 2018, through September 30, 2019.