SBA Starts Fiscal Year 2022 with Good News!
October 1st marked the first day of the new fiscal year for 2022. Aside from record volume and rates continuing to hover at record lows, there is more good news to share for loans approved during this fiscal year.
Business As Usual!
First, we are happy to report that the 504 program is open again and it is business as usual! On September 7th, (23 days before the end of the fiscal year 2021), the 504 program reached its maximum lending limit of $7.5 billion. This unprecedented event meant that even though projects were still being “approved” by the SBA, they were not being authorized. At that time, we were informed we would not receive formal loan authorizations until the funds were replenished on October 1st.
We are now starting to see loans being authorized and we have been told that, due to the 504 loan program operating at zero subsidy to the American taxpayer, that the Small Business Committee of both the House and Senate are working on bipartisan legislation to increase the maximum amount of the 504 program to ensure the industry never runs into this situation again. This is excellent news given the historically low rates and demand for the program.
Reduction of Ongoing Fee Offsets Expired Fee Relief!
Second, although fee waivers (that were part of the Covid Relief Bills) sunset on September 30th and are no longer available, the good news is that due to the strong performance of the SBA 504 portfolio, SBA reduced the ongoing guarantee fee for loans approved in FY 2022 by .2042% or 20.42 basis points. The ongoing fee is incorporated into the already low fully effective interest rates (quoted above) and the reduction of this fee more than offsets the loss of the fee waivers over the long haul and actually saves the borrower more money over the life of the loan!
If you have a customer that needs to refinance existing debt or is looking to expand and grow their current facility, buy a new one, or needs to purchase machinery or equipment, there has never been a better time and we urge you to give it a try. If you have questions on this topic or would like to discuss a specific project with one of our loan officers, please do not hesitate to reach out.
