Elimination of Certain 504 Loan Program Fees as Authorized by the Economic Aid to Hard-Hit Small Businesses, Nonprofits
Summary
This SBA Information Notice, Control No. 5000-20085, effective January 27, 2021, announces the temporary elimination of certain 504 fees under Section 327(b) of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, enacted December 27, 2020. It applies to 504 projects approved from December 27, 2020 through September 30, 2021, and removes the Third Party Lender participation fee and the CDC processing fee, but only to the extent appropriations offset the cost. SBA will reimburse each CDC that does not collect the processing fee from the borrower an amount equal to 1.5 percent of net debenture proceeds. Two-thirds of that, 1%, is paid at loan approval, and the remainder follows debenture funding.
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Full text
SBA Information Notice
TO: All SBA Employees and Certified CONTROL NO.: 5000-20085
Development Companies
EFFECTIVE: January 27, 2021
SUBJECT: Elimination of Certain 504 Loan
Program Fees as Authorized by the Economic Aid
to Hard-Hit Small Businesses, Nonprofits, and
Venues Act
The purpose of this Notice is to announce the temporary elimination of certain 504 fees in
accordance with Section 327(b) of the Economic Aid to Hard-Hit Small Businesses, Nonprofits,
and Venues Act (Economic Aid Act), enacted December 27, 2020. With respect to each 504
Project for which an application is approved beginning on December 27, 2020 and ending on
September 30, 2021, the following 504 fees are eliminated to the extent the cost of such
elimination in fees is offset by appropriations:
• The Third Party Lender participation fee paid by the Third Party Lender under
section 503(d)(2) of the Small Business Investment Act of 1958 (15 U.S.C.
697(d)(2)) (see also 13 CFR 120.972(a)); and
• The CDC processing fee charged to the Borrower under 13 CFR 120.971(a)(1).
Both fees are eliminated only to the extent the cost of such elimination in fees is offset by
appropriations and, consequently, the fees will be eliminated only for so long as appropriations
remain available. SBA will provide updated guidance on the availability of appropriations for the
elimination of these 504 fees as necessary.
SBA Will Reimburse CDCs for the Waived CDC Processing Fees
To the extent that the cost of such payment is offset by appropriations, SBA will reimburse each
CDC that does not collect the processing fee from the Borrower in an amount equal to 1.5
percent of the net debenture proceeds. SBA will reimburse the CDC with two-thirds of the 1.5%
(i.e., 1%) at the time of loan approval by SBA or, for CDCs with delegated authority to approve
a loan under the Premier Certified Lenders Program or the ALP Express Loan Program
authorized under Section 328(b) of the Economic Aid Act, upon SBA’s issuance of a loan
PAGE 1 of 2 EXPIRES: 1-1-22
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
number. The remaining amount owed to equal 1.5% of the net debenture proceeds will be paid to
the CDC immediately following debenture funding.
If a Borrower has already paid any portion of the processing fee to a CDC for a 504 loan that was
approved on or after December 27, 2020, the CDC must fully reimburse the Borrower within 10
business days of the CDC’s receipt of the fee from SBA and the CDC must retain documentation
of the payment in its loan file.
In addition, if the Third Party Lender has already remitted the Third Party Lender participation
fee to SBA for a 504 loan for which appropriations are available to offset the cost of the fee,
SBA will refund the fee to the Third Party Lender.
CDCs do not need to request that Loan Authorizations executed on or after December 27, 2020
be modified to reflect the fee eliminations addressed in this Notice. SBA will reflect the
appropriate fee relief in E-Tran. Accordingly, CDCs should not submit Loan Authorization
modification requests to the SBA Sacramento Loan Processing Center (SLPC) solely to reflect
the fee elimination. SLPC will not take any action on such requests.
CDCs are not permitted to cancel loans approved prior to December 27, 2020 and resubmit them
in order for the loan to qualify for the temporary fee relief described in this Notice.
Questions
Questions concerning this Notice may be directed to the Lender Relations Specialist in the local
SBA Field Office, which can be found at https://www.sba.gov/tools/local-
assistance/districtoffices.
John A. Miller
Acting Associate Administrator
Office of Capital Access
PAGE 2 of 2 EXPIRES: 1-1-22
SBA Form 1353.3 (4-93) MS Word Edition; previous editions obsolete
Must be accompanied by SBA Form 58
Federal Recycling Program Printed on Recycled Paper
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