What are the costs involved with an SBA Loan?
The interest rate on an SBA Loan is normally a variable rate. It is tied to the New York Prime Rate, adjusting quarterly in most cases. The margin is determined by the lender. However, the SBA forbids the margin to exceed 2.75% over the prime rate. The SBA precludes lenders from charging any lender points to originate or service the loan. SBA charges a one time guarantee fee based on the dollar amount of the loan. The fee ranges between 2.0% and 3.5% on the guaranteed portion of the loan. This fee is paid by the borrower directly to the SBA upon loan funding. The applicant will be charged fees for consulting, loan processing and recording fees. If applicable any fees in connection with appraisals and title insurance will also be paid for by the borrower.
