New Senate Bill to Offer Relief to Veterans on SBA Loans

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Veteran-owned small businesses could get major relief going forward if a new Senate bill is approved. U.S. Senator Jeanne Shaheen introduced the Heroes Business Opportunity Act of 2023, which offers relief to veterans on SBA loans. Specifically, the bill reduces some fees on certain types of SBA loans taken out by veteran-owned small businesses.

Heroes Business Opportunity Act: what is it?

On Tuesday, Senator Jeanne Shaheen (D-NH), who is also the Chair of the U.S. Senate Committee on Small Business and Entrepreneurship (SBC), introduced the Heroes Business Opportunity Act of 2023. The bill was introduced just a day before the committee’s hearing on veteran entrepreneurship, overseen by Sen. Shaheen.

To offer relief to veterans on SBA loans, the new bill waives the SBA Guaranty Fee, also called the Upfront Fee, on loans of up to $1 million by veteran-owned small businesses. The relief to veterans on SBA loans is available on 7(a) loans.

Another objective of the bill is to ensure that veterans have access to credit to start and grow their businesses.

“The brave men and women of our armed forces do not fail our nation when serving our country, and our nation must not fail them when they return home and transition to civilian life,” Shaheen said in a statement.

Relief to veterans on SBA loans: how much to expect

The Upfront Fee is needed to be paid in advance on a guaranteed part of the SBA loan. This Guaranty Fee is set annually, but it usually ranges between 0.25% to 3.75% of the guaranteed portion of the loan. Although the amount that SBA guarantees on a loan varies, it is generally 75% or 85% for 7(a) loans. Loans of $150,000 or less, SBA guarantees up to 85%, and loans above $150,000, SBA guarantees up to 75%.

So, if a small business takes out a 7(a) loan of $500,000, with a 75% guarantee, the guaranteed part comes in at $375,000. The upfront fee based on SBA’s fee guidance for fiscal year 2023 will be $3,937 (1.05%).

Specifically, Senator Shaheen’s bill partly makes permanent the changes made by the SBA to the 7(a) fee structure for FY 2024. The SBA eliminated the upfront fees on loans below $1 million 7(a) for all borrowers.

SBA’s change to the fee structure is only for a year (expires on Aug. 1, 2024). If the latest bill is approved, it would make changes to the fee structure permanent for loans made to veteran small business owners and their spouses.

Sen. Shaheen introduced a similar measure in April 2015, called the Veterans Entrepreneurship Act. The bill proposed several measures to reduce the SBA lending cost, including waiving upfront fees for veterans seeking SBA Express loans. President Obama signed the bill into law in July 2015.

Additionally, Chair Shaheen has also made efforts in the Senate to support military families. For example, Shaheen was able to secure $3 million in funding for her bipartisan legislation with U.S. Senator Tom Cotton (R-AR).

In FY2023, Shaheen came out in support of $25 million for the Beyond Yellow Ribbon (BYR) program. The BYR program funds the New Hampshire National Guard’s Care Coordination Program.