FY2027 changes eliminate two SBA fees for qualifying manufacturers, food supply chain businesses and businesses located in rural areas.
The SBA 504 loan program already offers businesses a way to finance major fixed assets with long-term, fixed-rate financing and as little as 10% equity in many projects. Now, qualifying businesses have another reason to consider the program.
For SBA 504 loans approved October 1, 2026 through September 30, 2027, SBA is waiving both the upfront guaranty fee and annual service fee for certain qualifying businesses.
For South Dakota businesses considering an expansion, commercial real estate purchase or equipment investment, these fee waivers could mean meaningful savings.
Who Qualifies for the Fee Waiver?
According to SBA guidance, the waiver applies to qualifying 504 loans for:
- Manufacturers: Businesses classified within NAICS Sectors 31, 32 and 33.
- Food Supply Chain Businesses: Certain agricultural production, food distribution, grocery, transportation and warehousing businesses identified by specific NAICS codes.
- Businesses Located in a Rural Area: Businesses meeting SBA’s applicable rural-area eligibility requirements.
The waiver also applies to qualifying projects financed through 504 Debt Refinance with Expansion and 504 Debt Refinance without Expansion, provided the business meets the applicable manufacturing, food supply chain or rural-area criteria.
The rural designation is particularly noteworthy for South Dakota, where many businesses operate in smaller communities.
What Fees Are Being Waived?
Two fees associated with SBA 504 financing are being eliminated for qualifying borrowers.
Upfront Guaranty Fee
This is a one-time SBA fee financed as part of the 504 loan. For FY2027, the standard upfront guaranty fee is 0.50%.
Annual Service Fee
This ongoing SBA fee is calculated on the outstanding balance of the 504 loan and incorporated into the borrower’s monthly payment. For FY2027, the standard annual service fee is 0.203%.
For qualifying businesses, both fees are waived, reducing the cost of SBA 504 financing.
What About Other SBA 504 Loans?
There’s good news for other 504 borrowers, too.
SBA has announced modest reductions to the annual service fees for FY2027:
- Regular SBA 504 loans: The annual service fee decreases from 0.209% in FY2026 to 0.203% in FY2027.
- 504 Debt Refinance Without Expansion: The annual service fee decreases from 0.2115% to 0.204%.
Regular SBA 504 loans include Debt Refinance with Expansion. Qualifying loans in either refinance category may receive the fee waivers.
What Does This Mean for South Dakota Lenders?
For banks and credit unions working with manufacturers, agricultural businesses, food supply chain companies or businesses in rural communities, these fee waivers provide another reason to consider SBA 504 financing.
With the additional fee savings, qualifying borrowers may benefit from lower financing costs while preserving working capital for business operations.
And remember, you don’t need to determine whether your borrower qualifies for the fee waiver before contacting us.
Bring Ally Dakota Development into the conversation early. We’ll help determine eligibility, structure the financing and identify whether your borrower may qualify for the FY2027 fee waivers.
Have a project you’re considering? Send it our way and let’s take a look at it together.
Your Ally in 504. 🩵