Starting Jan. 1, the U.S Small Business Administration will waive the upfront fee for veteran loans issued through its Express program, to make borrowing more affordable for entrepreneurs who have served in the military.
The measure could save borrowers up as much as $5,250 if they take out the maximum loan amount of $350,000, said Rachel Baranick, deputy district director of the SBA's Santa Ana District office. The typical upfront fee is 3 percent of the loan portion that's backed by the government, which can be up to 50 percent of the loan.
Nearly 60 percent of loans made to veterans in the Santa Ana District, which covers Orange County, were below $350,000, local officials said.
"If they save $5,250, borrowers can inject that much money into their business to buy things like equipment," Baranick said.
The SBA's Express program tries to do what its name suggests -- cut down on processing time by allowing lenders to use their own forms and reduce the paperwork, Baranick said.
Borrowing by veterans has been rising. The local district approved 100 loans for $67.5 million in fiscal 2013, which marks a 40 percent increase in the number of loans and a doubling of loan dollars from the previous fiscal year, based on numbers from the Santa Ana District office.
On Oct. 1, the federal agency began to cover upfront costs in a separate loan program. It is waiving the 2 percent fee it charges borrowers for loans of up to $150,000 in its 7(a) loan program, the agency's largest one, translating to as much as $2,550 in savings.
For more information, visit sba.gov.
(c)2013 The Orange County Register (Santa Ana, Calif.)
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Original headline: SBA waives veteran loan fees
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