The U.S. Small Business Administration is extending a waiver on loan fees, with a goal of encouraging startups.
Last year, the SBA waived all fees on loans of $150,000 or less. Depending on the size of the loan, those fees can run into the hundreds or thousands of dollars. The agency is now extending that offer until next fall.
Eric Ness, who directs Wisconsin’s SBA, said access to capital, or startup money, is the biggest hurdle would-be entrepreneurs face. Ness credits the waiver with helping more people take the plunge.
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“In 2013, without the fee waiver we did 734 loans,” he said. “This last year we did 951 loans, so we saw a 30 percent increase.”
Borrowers still have to present a business plan and pay interest rates that are above prime. Normally, Ness said the fees go to protect private lenders from the risk of businesses that fail. For now, the government will cover that.
Those who have served in the armed forces and their spouses are eligible for much larger benefits. All the fees aren’t waived, but it’s basically a half-price sale.
“If you’re a veteran, and, say, you want a $4 million loan, we’d pay 50 percent of the guaranteed fee on that program where a non-veteran would pay the SBA loan fee,” he said.
Ness said last year’s startups in Wisconsin included retail stores, restaurants, and manufacturers. Prospective business owners can start the process at the SBA’s website.
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