Inside the Heroes Business Opportunity Act of 2023

There’s always something brewing in Washington, and ARF Financial is here to break down the latest. On November 14, 2023, the U.S. Senate Committee on Small Business and Entrepreneurship (SBC) brought forth a bill that hopes to give veteran small-business lending a long-term boost. Introduced by SBC Chair Senator Jeanne Shaheen (D-NH), the Heroes Business Opportunity Act of 2023 “would waive the Small Business Administration’s (SBA) Guaranty Fee (also known as the Upfront Fee) for 7(a) loans up to $1 million made to veteran-owned small businesses,” according to the SBC website. In short, this bill would make certain that veterans have all the resources necessary to access credit that will help start or grow their small 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,” Sen. Shaheen said in a statement.

To help offset the Small Business Administration’s (SBA) cost for funding borrowers who default on their loans, guaranty fees must be paid in advance on the guaranteed portion of an SBA loan. The fee is set by the agency each year, meaning they have a tendency to fluctuate and typically range from 0.25 percent to 3.75 percent. To put this into perspective, the SBA’s estimated fee income for fiscal year 2022 was $27.7 million.

In 2023, the SBA introduced 7(a) changes to the fee structure that was put into place for fiscal year 2024; this effectively eliminates the upfront fees on 7(a) loans below $1 million for all borrowers—but only for this year. And because the SBA updates its fees on an annual basis, that means these would likely rise in the future. With the proposal brought forth by the Heroes Business Opportunity Act of 2023, these changes to the fee structure would make permanent those introduced earlier this year—but only for SBA loans made specifically to veteran small-business owners and their spouses.

The full text of the bill can be found here.

As a small business owner, you’ve got more important things to focus on than new bills passing through the Senate. We’ve always got an eye on the latest from Washington, and we’ll be writing about it all right here at the Financial Pantry. If you need a loan, ARF Financial is also the place to get pre-qualified for a line of credit for your business. With just 4 questions and 5 steps, our online application is the quickest way to get approved. Come see for yourself!