How much can a lender charge to assume an SBA loan?
Short answer
No more than 1 percent of the principal balance at the time of assumption on a 7(a) loan. The fee must be reasonable and consistent with the lender's non-SBA loans. Either party may pay it. Source: SOP 50 10 8.1, Sec. A, Ch. 4, Para. C.2.e.
No more than 1 percent of the principal balance outstanding at the time of assumption on a 7(a) loan. SOP 50 10 8.1, Sec. A, Ch. 4, Para. C.2.e (about p. 69) sets that limit.
Other limits on the 7(a) fee
- It must be reasonable in relation to the services provided.
- It must be consistent with the assumption fee the lender charges on its non-SBA loans.
- SBA's guaranty does not extend to the fee, so SBA will not pay it at guaranty purchase.
Who pays
The fee may be paid by the seller or the assumptor. The SOP does not say which, so settle it in your purchase agreement.
Fees that do not apply
SBA does not require a new guaranty feeA fee SBA charges on the guaranteed part of a loan. The lender pays it and may pass it to you. Full definition for an assumption. SBA also notes that lien positions are often maintained, which can remove the need for recording fees (Para. C.2.e).
504 loans
With SBA's written approval, a Certified Development Company (CDC) may charge an assumption fee. It can be up to 1 percent of the outstanding principal balance of the loan being assumed (13 CFR 120.971(a)(5)). The SOP's fee table says the borrower pays it to the CDC (Sec. A, Ch. 4, Para. E.2, p. 80).
What else to budget
A 7(a) lender may collect necessary out-of-pocket expenses and hourly legal fees (13 CFR 120.221(c) and (e)). Ask for the fee and costs in writing before you sign a purchase agreement.
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