Processing fees, origination fees, application fees, points, brokerage fees, bonus points, and other fees that could be charged to an SBA loan applicant are prohibited. The only time a commitment fee may be charged is for a loan made under the Export Working
Capital Loan Program.
Effective for all loans where the applications were received by the lender on or after December 22, 2000, a new prepayment charge paid by the borrower to SBA ("subsidy recoupment fee") has been added for those loans that meet the following criteria:
- have a maturity of 15 years or more where the borrower is prepaying voluntarily;
- the prepayment amount exceeds 25 percent of the outstanding balance of the loan; AND
- the prepayment is made within the first 3 years after the date of the first disbursement (not approval) of the loan proceeds.
The prepayment fee calculation is as follows:
- during the first year after disbursement, 5 percent of the amount of the prepayment;
- during the second year after disbursement, 3 percent of the amount of the prepayment; or
- during the third year after disbursement, 1 percent of the amount of the prepayment.
The Small Business Act defines an eligible small business as one that is independently owned and operated and not dominant in its field of operation. The Act also states that in determining what is a small business, the definition shall vary from industry to industry to adequately reflect industry differences. The SBA has therefore developed size standards that define the maximum size of an eligible small business. If a potential borrower is close to these standards, size eligibility should be discussed with the local SBA office. Also note that the standards for a particular business may change from time to time and some exceptions do apply.
When affiliations exist with other companies (for example, through common ownership, directorships, or by contractual arrangements), the primary business activity must be determined both for the applicant business as well as for the entire affiliated group. In order to be eligible for financial consideration, the applicant must meet the size standard for its primary business activity and the affiliated group must meet the standard for its primary business activity.
DYNAMAX BUSINESS CREDIT
SBA Loan Programs part 9