According to an LA Times interview of new SBA chief Steven C. Preston, a number of changes have been proposed to Congress that would lower loan fees for the 2008 fiscal year starting October 1, 2007.The borrower's upfront fee for the popular 504 loan program would be eliminated resulting in a 50 basis points savings - that's one half of a percent of the guaranteed loan amount. That's a nice savings.
On the other hand, the upfront fees for the 7(a) program are staying flat and the annual fees are going down. While certainly it's helpful that annual fees are going down, most borrowers need every penny they can get when the loan is initially funded. It would have been a bigger help had the proposed budget include lower upfront fees for the 7(a) program as well.
Two key things to remember. First, nothing has been approved yet. With the recent change in congressional control, there's no guarantee that Congress will vote for anything that reduces federal revenues. Second, the earliest a change will be implemented is October 1st when the new fiscal year commences - not much help if you need a loan before then.
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Related Tags: LA Times, SBA, 7(a)loan, 504 loan, business loan, Steven C. Preston
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