SBA Payment Waivers Extended and Guaranty Fees Waived!

Feb 6, 2021 | Coffman Capital, SBA Loan Program

SBA Payment Waivers Extended and Guaranty Fees Waived!

The new Federal Economic Aid Act indicates that for all new SBA 7(a) loans approved from Feb 1, 2021 till September 30, 2021, there will be some really great benefits:

  • No Payments for 3 months!*
  • SBA Guarantee Fee waived!*
  • Bank’s Guaranty Increased from 75% to 90% for most loans!

*Limited to $9,000/month; Originally 6 months, modified 2-18-21; Terms of guaranty fee waiver and other relief efforts may be adjusted by the SBA at any time and are subject to available funds via Congressional appropriation.

What most Business Buyers will notice first is the 3-Month Payment Waiver.  Since you close SBA loans by paying interim interest till the first month, you may not make a payment for 4 months.

The Guarantee Fee waiver is also significant.  The current SBA fee for 7(a) loans is 3% of the guaranteed amount, which temporarily is raised from 75% to 90%, so it saves even more.  Using the normal 75% guaranty, if you borrowed $500,000 the guaranty is $375,000 and fee of $11,250 which is most lenders finance into the loan (we don’t like working with those that do not).  With the increased 90% guaranty, you would save $13,500 before interest calculations on the financed amount (see below).

This Fee Waiver has the effect of a slight decrease in your cash injection.  The fee is included in the “Project Cost” for your loan.  Since Coffman Capital’s Business Acquisition Financing is normally predicated on 10% cash injection (or 5% with a seller standby note, call for details), so your fee is 90% financed, that means the above example reduces your cash down by approximately $1,350 with the increased guaranty.  Every little bit helps!

A side note on the Guaranty percentage increase from 75 to 90% is that it may help lenders approve a loan that may have been marginal due to things like COVID earnings drops or other issues.  That’s another plus.

Conclusion??  Now May Be A Very Good Time To Buy A Business!  That also includes buying a qualified building** or buying a business with a building!  So this is really a good time to use the program to your best advantage.

**Building must be 51% occupied by the business entity applying for the loan, and may include some rental spaces if they take up 49% or less space in the building.

Coffman Capital offers the best SBA terms available that we can find that often stand out against the “vanilla” rates and terms – and even some amortization periods.  Our biggest value is getting the job done when many lenders only find problems with an otherwise qualified loan request.

Coffman Capital has the resources and expertise to work on your loan in a timely manner and will do our best to help you take advantage of this new benefit.

Please call Coffman Capital to help you get started on your new Business Opportunity!  You can call directly at 813-891-1811, or go to our Contact Page by clicking HERE.

We’re Ready to Help You Grow!