On Wednesday, August 30, 2023 the SBA issued Information Notice 5000-848801, 7(a) Fees Effective October 1, 2023, for Fiscal Year 2024 (dated August 29, 2023). The new fees will be effective for loans approved by SBA during the period October 1, 2023 through September 30, 2024.
This Notice announces (A) the 7(a) Lender’s Annual Service Fee (also known as the “Lender’s Annual Service Fee”) and (B) the SBA Guaranty Fee (also known as the Upfront Fee) for 7(a) loans for fiscal year 2024 (FY 2024), and the exceptions to those fees authorized for FY 2024 for the 7(a) loan program.
(A) The FY 2024 lender’s Annual Service Fee (Lender’s Annual Service Fee) will be:
- For loans with a gross approval amounts (guaranteed and unguaranteed portions) of $1 million and less – zero.
- For loans with gross approval amounts (guaranteed and unguaranteed portions) greater than $1 million – 0.55% of the guaranteed portion of the outstanding balance of the loan.
(B) The SBA Guaranty Fee (Upfront Fee) for loans with maturities greater than 12 months [excluding Export Working Capital Program (EWCP) loans and SBA Express loans made to veteran-owned businesses the SBA Guaranty Fee (Upfront Fee)] will be:
- For loans with gross approval amounts (guaranteed and unguaranteed portions) of $1 million or less – zero.
- For loans with gross approval amounts (guaranteed and unguaranteed portions) over $1 million up to and including $2 million –
- > 1.45% of the guaranteed portion of the loan up to and including $1 million and
- > 1.70% of the guaranteed portion of the loan over $1 million.
- For loans with gross approval amounts (guaranteed and unguaranteed portions) over $2 million –
- > 3.50% of the guaranteed portion of the loan up to and including $1 million and
- > $3.75% of the guaranteed portion of the loan over $1 million.
Please see the notice for information regarding the fees charged when two or more loans with maturities longer than 12 months are approved within 90 days of each other, and when there is an increase in the original loan approval amount. Please also refer to the notice for information regarding the FY 2024 fees that will apply to SBA Express loans made to veteran-owned small businesses and to EWCP loans.
What Are SBA Loan Rates For Accounting Practice Acquisition Loans?
The interest rate you’ll pay on your SBA practice acquisition loan will depend on the program you’ve chosen, the amount you’re seeking to borrow, and the repayment terms you’ll return the borrowed amount within. It will also depend on the daily prime rate, which will fluctuate based on the actions of the Federal Reserve.
Your SBA lender will offer a fixed or variable interest rate depending on your desired program. Fixed interest rates are static throughout the term of your loan, whereas variable interest rates will change based on the prime rate, the LIBOR rate, or the SBA Optional Peg Rate, which is “a weighted average of rates the federal government pays for loans with maturities similar to the average SBA loan,” according to the SBA.
While the maximum rate is set by external factors, your specific interest rate will be determined by your lender based on your business’s information.
SBA 7(A) Loan Amounts, Terms and Uses
The SBA 7(A) program is one of the most popular of their different programs. With a maximum borrowing amount of $5 million and repayment terms ranging from 10 to 25 years, this financing option is used by accounting business owners for various reasons, including asset purchases, working capital management, and business expansion / acquisition.
Can SBA 7(a) Loan Rates Be Lower Than Other Business Loans?
The government backing of SBA 7(a) loans significantly reduces the risk for lenders, making them more willing to offer loans at competitive rates. Additionally, the rate structure established by the SBA ensures that these loans remain affordable for small business owners.
3 Tips to Secure a Better Rate on Your SBA Loan
- Improve your credit score: Before applying for a loan, take steps to boost your credit score. This might include paying down debts, ensuring no errors on your credit report, and building a longer credit history.
- Consider a longer maturity: If feasible for your business, opting for a longer-term loan can secure a lower interest rate.
- Provide collateral: Secured loans, or those backed by an asset, often have lower interest rates since they present less risk to lenders.
Getting Started on Your 2023/2024 Practice Acquisition Loan
Whether you are buying an accounting practice through us, one of our competitors, or working directly with a Seller, we can help secure a loan for you.
ABA Advisors has relationships with several national and regional lenders that provide both conventional and SBA guaranteed loans. We do more than just give you a list of lenders to call and hope it all works out. We guide you through the entire process from start to finish.
This can even include approaching and working with more than one lender when necessary.
Click here to learn more about how ABA Advisors can help you with financing. Or you can click here to go to our Contact Us page and send us a message to contact you at your convenience.
For financing questions contact Chuck Hayes – President – ABA Advisors – 317-546-7720 direct – ch@acctsales.com