The ongoing guarantee fee is an annual fee collected monthly, calculated as a percentage of the total Pool Loan amount. This fee is established under the Recovery Act and aims to ensure that the cost of the loan guarantee is zero, as mandated by the Federal Credit Reform Act of 1990. The funds generated from this fee are used as a reserve to cover potential losses in the program.
The ongoing guarantee fee is primarily used in the context of business loans, particularly those backed by the Small Business Administration (SBA). It plays a crucial role in the SBA Secondary Market Guarantee Program, which facilitates the funding of small business loans. Users may encounter this fee when applying for or managing SBA loans, and they can find relevant forms and templates through platforms like US Legal Forms.
Here are a couple of examples of abatement:
For instance, a small business securing a loan through the SBA may be subject to an ongoing guarantee fee based on the amount borrowed. If the loan amount is $100,000, and the fee is set at 0.5 percent annually, the business would pay approximately $42 per month as the ongoing guarantee fee (hypothetical example).
Key legal references include:
| Term | Definition | Key Differences |
|---|---|---|
| Guarantee Fee | A fee paid to secure a loan guarantee. | Ongoing guarantee fee is collected monthly, while a guarantee fee may be a one-time charge. |
| Loan Origination Fee | A fee charged by a lender for processing a new loan application. | Loan origination fees are typically one-time fees, whereas ongoing guarantee fees are recurring. |
If you are applying for an SBA loan, be prepared to account for the ongoing guarantee fee in your budget. Consider using US Legal Forms to access templates that can help you manage your loan application process. If you find the process overwhelming or complex, seeking assistance from a legal professional may be beneficial.
Browse our library of 85,000+ state-specific legal templates.
It is an annual fee collected monthly based on the Pool Loan amount for SBA loans.