Fee Reduction on SBA Loans Under $150K Leads to Savings for Rhode Island Small Business Owners

PROVIDENCE, R.I.  – Rhode Island small business owners have saved an estimated $50,000 in fees since the SBA announced a new policy for FY 2014 setting fees on SBA 7(a) loans for $150,000 and under to zero ($0).

Last year, the SBA decided to eliminate fees on loans of $150,000 or less after conducting a review of the 7(a) Loan Program. As a result, a small business owner obtaining a $150,000 loan can save more than $2,500 in fees that previously would have been charged. The 7(a) Loan Program is the SBA’s primary program to help start-up and existing small businesses obtain financing when they might not be eligible for business loans through normal lending channels.

“Since the new fee structure was introduced last October, SBA has witnessed an increase in low dollar loan activity and small businesses throughout New England have saved an estimated $500,000,” said Seth A. Goodall, SBA New England Regional Administrator. “This new initiative is another tool to help us serve the small business community, who are doing amazing work to strengthen our economy for the long-term.”

During the fiscal year that ended on September 30, 2013, 66 percent of the SBA-guaranteed loans made in Rhode Island were under $150,000.  Between October 1 and December 31, 2013, 77 percent of the SBA-backed loans were under $150,000.

“I am pleased to see that the initial response to the fee reduction is positive,” said Mark S. Hayward, director of the SBA Rhode Island District Office.  “The policy changes are resulting in greater access to capital for Rhode Island small businesses and making that capital available at lower cost to the borrowers.”

In addition, an SBA fee reduction to zero ($0) for all veteran loans authorized under the SBA Express program up to $350,000 went into effect on January 1, 2014 under a new program called SBA Veterans Advantage.  This program is expected to yield significant savings for veterans who want to start or grow a business. Of all SBA loans to veterans, 73 percent are $350,000 and below.

These two initiatives are in place through the end of the current fiscal year, September 30, 2014.

For more information about SBA loan programs and services, or to find an SBA lender, visit our website at www.sba.gov/ri, or call the Rhode Island District Office at (401) 528-4561.

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