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Rate of Interest: The interest rate on the SBA portion will be fixed for
the term of the loan and is determined approximately by the current rate
on the 10-year treasury rate plus approximate 300-400 basis points. Interest
rates are fixed and established at the SBA 504 FUNDING.
The rate (inclusive of all servicing fees) to the borrowing business concern
is usually 2.75% over five or ten year treasury notes and is typically .5%
to 1% under market rates. Here are the Current Rates. The rate is
determined by the bond market at the sale of government guaranteed
securities. In addition approximately .7% in servicing fees for the SBA
504 portion.
Participating first mortgage lenders are allowed to charge market rates
which may be fixed or variable.
Fees: The fees listed below are based on SBA portion of the loan and are
financed with the loan.
Preferred's Processing Fee: Up to 1.5% of the SBA 504 portion.
Participation Fee: One time .5% fee to the SBA on lender’s participation
usually paid by the primary lender or passed onto the borrower to cover.
Other Program Fees:
• .25% Funding Fee.
• .5% (compounded) Underwriting Fee.
• SBA one time Loss Reserve of .5%.
• 1.25% closing cost allowance.
• The Borrower is responsible for title insurance,
and fees for surveying, engineering, appraisals,
environmental audits, architectural, legal,
accounting and construction period interest.
Stimulus/American Recovery and Reinvestment Act (ARRA)
As of February 17, 2009 – February 28, 2010 there is a moratorium/waiver of the processing fee as well as participation fee. Effectively this is an initial 2% savings, but far greater as this fee is amortized long-term.
We have asked for this moratorium to be extended to September 30, 2010.
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