Great news regarding SBA financing!

[Darryl Dahlen]

The senate passed a small business bill 61 to 37 on September 14th that will greatly help re-invigorate SBA lending. If this bill becomes law, the following items will be of significant benefit to borrowers.

- SBA fees (origination and the guarantee fee) will be waived
- 7a loans will be increased from 2M to 5M
- 504 loans will be increased to 10M
- The LTV will be increased from 75% to 90%
- There will be more uses for an SBA loan

The House has already passed a similar bill so negotiating a final version should not be an issue. From there, the bill can be signed into law.

The last stimulus package ran out out funds back in May after being extended by Congress 4 times. As a result, SBA loan closings fell sharply. There was $1.5 Billion in SBA loans funded in May, but only $400M in June.

This new bill should bode well for those of us who originate commercial loans. Not only will those loans become cheaper for the borrower to obtain, but they will also become easier to close!

If anyone has questions about the SBA and their programs please don't hesitate to ask.

[Darryl Dahlen]

Bryan- SBA loans are fantastic for most owner-occupied commercial properties where the owner occupies 51% of the space. The SBA is a good fit for office or retail condos too.
The 7a loan is the most used loan the SBA offers. Some uses for a 7a loan include: partner buyout, working capital, refinance high-interest debt, primary debt refinance, purchase, and equipment loans.
Unfortunately, SBA loans are recourse loans where the borrower's credit, and tax returns, are required. Still, having the SBA guarantee the loan takes a lot of focus off of the borrower compared to a non-government backed loan where they are completely under the microscope.
That being said, there is not much in the way of non-recourse funding out there iright now. HUD has the best programs, but as you know, they are not easy to obtain and are primarily focused on multi-family and healthcare projects.

Mitch- SBA loans are for commercial property only, and for owner-occupied properties at that. If a person wanted to buy a commercial property as an investment, a USDA B&I loan can sometimes be a good fit.