With the new federal fiscal year that started 1 October there have been some exciting changes at the Small Business Administration that affect us directly here in New Mexico.
For the Federal fiscal year that started 1 October 2013 and continuing through 30 September 2014, SBA is not charging any fees on 7(a) loans less than $150,000. This should be a big help for startup and very small businesses in our state because it means there is no cost differential at all for borrowers of these smaller size loans for using the SBA guarantee as opposed to not using the guarantee. Since the lenders have to certify they would not have made the loans without the SBA guarantee, we think this should lower the cost of capital for small businesses that can take advantage of this no fee offer because it will allow the businesses to use regular term loan financing as opposed to higher cost asset based financing or factoring receivables.
For our nation’s veterans, SBA eliminated fees on SBA Express loans up to the maximum amount for that program, $350,000. This provision replaces the Patriot Express Initiative SBA has had since 2007. Any use of loan funds that were eligible under Patriot Express will still be allowed under SBA Express. However this waiver of fees on SBA Express provides a differentiation that allows SBA to express its gratitude to the veteran small business community in the form of real cash savings.
I mentioned in the first paragraph the direct impact on New Mexico these changes have. We benefit here from these changes applying exactly the same all across the country. If you are in Los Angeles, Chicago or New York, the dollar amounts are the same but $150,000 or $350,000 goes a lot further in New Mexico!
There will be more developments as the year progresses. Please keep an eye on sba.gov and our New Mexico site, sba.gov/nm to keep up to date.
Have a great Holiday Season and a successful 2014!