March 17 2009
One of our lender's (Mark Johnston of American Chartered Bank in Mt. Prospect) told us some great news regarding SBA 504 loans which allows the purchase of owner-occupied real estate with only 10% down. President Obama signed into law the American Recovery and Reinvestment Act of 2009 ("Recovery Act"). Section 501 of this legislation provides for the reduction and elimination of certain SBA fees associated with 504 loans. The SBA issued a policy notice on 3/16 which authorizes the elimination of 0.5% third party lender fee and the 1.5% processing fee from all 504 loans approved on of after 2/17/09. How long will this last? We're told that until the aggregate dollar amount of 504 loans exhausts the funds dedicated to this purpose. With $3.6 billion funds being appropriated to this program, SBA estimates these fee eliminations to be applicable thru 12/31/09. On a $1 million commercial real estate purchase, fees decrease 63% resulting in a savings of more than $8500! This SBA program requiring only 10% down flys in the face of the typical conventional loan where you are required to put down 20-30% down on commercial real estate purchases. Even I would have to call this a stimulus!
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