504 Loan Fees

The SBA 504 loan program is self-funding with no subsidy for loan losses provided by the federal government. As a result, a portion of the issuing costs and monthly servicing fees for each 504 loan is applied to program servicing and a loan loss reserve.

To preserve cash resources to the borrower, all of the fees on the SBA 504 loan are added to the loan amount and amortized over the term of the loan. Fees include a guaranty fee paid to the SBA, the underwriter, and closing costs to the local Certified Development Company of between 2.63% and 2.75% depending on the term of the 504 loan, plus a bond counsel fee of $2,500. In addition, the monthly payment will include servicing fees of between .825% and 1.23% annually. 

Finally, the first mortgage lender must pay SBA a one-time fee equal to .5% of the principal amount of its permanent, companion term loan that is in a senior lien position to the SBA 504 loan.

Under the provisions of the American Recovery & Reinvestment Act of 2009, the 1.5% processing fee paid to WBD, and the .5% first mortgage lender fee will not be charged to the customer, but paid by a subsidy from the U.S. Treasury.  This subsidy will expire at the earlier of September 30, 2010, or when the appropriations provided by the Treasury for payment of these fees has been fully disbursed.