SBA Fee Relief Expected to be Restored by Year End
Chris Crawford, NADCO president & CEO
December 17, 2009
This is an update on appropriations legislation now moving through Congress that will likely enable SBA to resume and extend the payment of the 504 CDC processing fees and the fees for the bank first mortgage.
The Department of Defense appropriations bill, H. R. 3326, has been amended to provide $125 million for an additional amount of funds to the Small Business Administration Business Loans Program Account. This account covers the costs of both the 504 and 7(a) loan guarantee programs. Differing forms of this legislation have passed both Houses of Congress and these differences are now being worked out. NADCO is hopeful that a final bill will be passed as soon as next week, and signed quickly by President Obama.
It is intended that this Defense bill will extend the fee relief until February 28, 2010 and that the Jobs bill, to be taken up by Congress at the start of the new year should extend it to September 30, 2010 (see details below). This is great news for our 504 borrowers. We are hopeful that this will be put in place as planned in order to provide more assistance to our small businesses to help them to expand and create more jobs for the economy.
Once the DOD funding bill passes, SBA would need to determine how this new funding would impact the 504 loan packages now sitting in the queue at the Sacramento Loan Processing Center, as well as packages in process, or packages being prepared by CDCs in the coming week or so.
We believe that SBA will simply "re-start" the fee offset process they have used for the past several months as part of the ARRA, and continue funding the two fees for all loans in the SLPC queue. However, until the legislation passes, is signed by the President, and interpreted by SBA management, we cannot be certain how this funding will impact existing or new 504 loan packages.
We are discussing these issues with SBA, and right now, if your borrower wants to seek the fee relief, we would urge you to do the following:
If your loan package has been approved and is IN the ARRA queue at the SLPC now awaiting notice of funding, leave it there for now. It may receive funding from the current money, or it might be funded shortly from this new H. R. 3326 appropriation. This could come as early as the first of the new year.
If your loan package is being processed now by the SLPC, and you want the fees relief, ask to have your approved loan package moved into the ARRA queue. Again, it would likely get coverage of the fees, assuming SBA interprets the bill language as allowing funding of loans now in process, which we believe will occur.
If you are getting ready to submit a loan package to the SLPC, while I cannot say for certain the fees would be offset via the new appropriation, NADCO is urging SBA to simply continue to fund the fees as they are doing for current packages. I believe SBA will agree to do this if not precluded by Congressional language. Again, ask that your loan package be put into the ARRA queue.
If you have a loan package at the SLPC or are submitting a package that is absolutely urgent and the fee offset somewhat secondary, then turn around delays may force you to forego the offset of the two fees, and require your borrower to pay the fees. Hopefully, there are very few such packages so time-sensitive that this would occur. Carefully consider the impact of this action before you turn down the high probability of getting the ARRA savings for your borrower.
In summary, with the expectation of this new funding becoming available within two weeks, I suggest you seek these fee offsets for your borrowers whenever possible by leaving or getting your packages into the ARRA queue SBA has set up.
Now a second piece of great news. The Commerce - Justice 2010 appropriations bill, H. R. 2847, also known as the Jobs bill, is now moving through Congress. This bill contains funding for an additional $354 million to cover fees for both 504 and 7(a) by further extending the provisions of the ARRA through September 30, 2010. We expect this bill to be taken up quickly when Congress returns in January 2010. The purpose of this additional funding is to extend the benefits of the fee reductions through the end of this fiscal year. We will provide more information on this bill in the coming weeks.
Combined with the impact of S. 2869, for which we have asked members to seek co-sponsoring Senators, with the debenture increase to $5 million ($5.5 million for manufacturing and energy projects) and refinancing of existing debt, it is clear that both the Administration and the Congress are now focused on providing more benefits to small businesses that are starving for expansion capital.
NADCO has been, and will continue to be, helping lead a massive coalition of industries and associations pushing for quick legislation to both continue the program cost reductions initiated by the February 2009 stimulus bill and expand the programs through numerous enhancements that will reach more small businesses. Your board members leading this effort include Jean Wojtowicz, Chairman, Joe Wolfe, Vice Chair, and Jim Baird, Vice Chair for Legislative Affairs.
We also appreciate the deep commitment and leadership shown by Congress and the Administration in working extremely hard to help small business. Foremost among many we have to thank are:
- Senator Mary Landrieu (D-La), Senate Small Business Committee Chair
- Senator Olympia Snowe (R-Me), Senate Small Business Committee Ranking Member
- Cong. Nydia Velazquez (D-NY), House Small Business Committee Chair
- Cong. Sam Graves (R-Mo), House Small Business Committee Ranking Member
- SBA Administrator Karen Mills
I urge you to support these initiatives in Congress by thanking your Congressional Members and Senators for voting for these important funding bills. I also urge you to get your loan packages into the SLPC to take advantage of these expected new funds over the next several months to save your small business borrowers tens of millions in fees.
NADCO will keep you advised of further actions here in Washington. Thank you for your support and assistance with our legislative agenda.