The U.S Small Business Administration (SBA) is looking to serve small business owners as they look for ways to access capital.

Earlier this year, the SBA implemented a new measure to help get small business loans into the hands of veterans.  To continue supporting America’s veterans, the SBA Veterans Advantage reduces the up-front guaranty fee from 3% to 0% for SBA Express loans over $150,000 approved to small businesses owned by qualified veterans.

The SBA has implemented this measure in order to encourage greater participation in SBA lending programs with a direct benefit to veteran-owned small businesses.

This measure set the borrower upfront fee to zero for all veteran loans authorized under the SBA Express program (up to $350,000) which accounts for 73 percent of these loans.  The initiative started on January 1st, and will continue through the end of the fiscal year.

This change makes loans more affordable for borrowers.

Again, this policy announcement means that under the SBA Express program, veteran borrowers will no longer have to pay any upfront fee for any loan up to $350,000.

SBA provides veterans access to business counseling and training, capital and business development opportunities through government contracts. In FY 2013, SBA supported $1.86 billion in loans for 3,094 veteran-owned small businesses.   And since 2009, the dollar amount of SBA lending support to veteran-owned firms has nearly doubled.

Businesses must be 51% or more owned and controlled by an individual or individuals in one or more of the following groups: Veterans (other than dishonorably discharged); Service-Disabled Veterans; Active Duty Military service member participating in the military’s Transition  Assistance Program (TAP); Reservists and National Guard Members; or the Current spouse of any Veteran, Active Duty service member, or any Reservist or National Guard member; or widowed spouse of a service member who died while in service or of a service-connected disability.


VAMBOA no fee loans

There is great news for veteran entrepreneurs! The U.S. Small Business Administration (SBA) is extendingits Veterans Advantage program through September 30, 2015. The Veterans Advantage program is also being expanded to include loans up to $5 million. The SBA will continue to offer its provision to eliminate the upfront fee paid by all borrowers for the guaranteed portion of 7(a) loans of $150,000 or less.

Prior to the change, entrepreneurs using the SBA guarantee through private lenders had to pay up to 2% of the guaranteed portion of their loans. This would leave small business owners with fees of up to $2,700.

The SBA is also waiving servicing fees for participating lenders paid by them on loans of $150,000 or less.  Beginning on October 1, 2014, the servicing fee that lenders pay each month on 7(a) loans greater than $150,000 will drop to 0.519% on the guaranteed portion of the outstanding balance.

The up-front guaranty fee is being waived for qualified Veteran owned small business owners using SBA Express loans for amounts up to $350,000.  For Veterans using 7(a) loans outside the Express program, upfront fees continue to be waived for loans up to $150,000.

For loans of $150,000 to $5 million, with a maturity in excess of 12 months, the no upfront-fee will drop by 50% using this formula:

Loans of $150,001 to $700,000 will be at 1.5% of the guaranteed portion.

Loans of $700,001 to $5,000,000 will be at 1.75% of the guaranteed portion up to $1,000,000, plus an additional 1.875% of the guaranteed portion over $1,000,000.

Loans with a maturity of 12 months or less can expect to pay an upfront fee of 0.125% of the guaranteed portion.

In order to qualify for SBA Veterans Advantage, small businesses must be at least 51% owned and managed by an individual or individuals who are veterans, service-disabled veterans, active duty military service member participating in the military’s Transition Assistance Program (TAP), Reservists and National Guard members. Also eligible are the current spouses of any of the previous,  or the widowed spouses of service members who died while in service, or of a service-connected disability.  Verifying documentation proving eligibility is required.

The Veteran and Military Business Owners Association (VAMBOA) is a non-profit business trade association that promotes and assists Veteran Business Owners, Service Disabled Veteran Owned Businesses (SDVOB) and Military Business Owners. Small businesses are the backbone of our economy and responsible for job generation. That is why VAMBOA provides its members with Business Coaching, Contracting Opportunities, a Blog that provides information, Networking contacts and other resources. Membership is FREE to Veterans. Join Now!

VAMBOA: SBA Extends No-Fee Loans: By Debbie Gregory