For all SBA 504 loans approved after October 1, 2017, the Ongoing Borrower Guarantee Fee has decreased. This fee is added to the debenture rate each month and is included in the full term effective interest rate that is quoted for 504 loan rates. The current fee of 0.697% has been reduced to 0.642%, representing a drop of 5.5 basis points.
As an example, the October, 2017, full term effective interest rate for the twenty year debenture was 4.635%. That same rate with the fee reduction would be 4.58%. These fees are calculated on the average remaining balance of the 504 loan over five year periods. The Ongoing Borrower Guarantee Fee is adjusted annually in October to offset the costs of maintaining the 504 program, since it is not subsidized by the U.S. government.