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The Handbook of Financing Growth: Strategies, Capital Structure, and M&A Transactions, Second Edition by D.L. WILLIAMS, JOHN P. FUNKHOUSER, GONZALO FERNÁNDEZ, LARRY E. ROBBINS, KENNETH H. MARKS

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The annual ongoing servicing fee for all 7(a) loans approved on or after October 1, 2006, is 0.494 percent of the outstanding balance of the guaranteed portion of the loan. The legislation provides for this fee to remain in effect for the term of the loan.
 
Combination Financing As of October 1, 2004, combination financing is no longer allowed.
 
Prohibited Fees Processing fees, origination fees, application fees, points, brokerage fees, bonus points, and other fees that could be charged to an SBA loan applicant are prohibited. The only time a commitment fee may be charged is for a loan made under the Export Working Capital Loan Program.
 
Prepayment Penalties Prepayment penalties can be charged when all of the following three conditions are met:
1. The loan has a maturity of 15 years or more and the borrower is prepaying voluntarily.
2. The prepayment amount exceeds 25 percent of the outstanding balance of the loan.
3. The prepayment is made within the first three years after the date of the first disbursement (not approval) of the loan proceeds.
The prepayment fee calculation is as follows:
• During the first year after disbursement, 5 percent of the amount of the prepayment.
• During the second year after disbursement, 3 percent of the amount of the prepayment.
• During the third year after disbursement, 1 percent of the amount of the prepayment.
Certified Development Company (CDC), a 504 Loan Program The CDC/504 Loan Program is a long-term financing tool for economic development within ...

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