A Study of Trends in Loan Processing, Making and Servicing Fees as Related to Business and Industry Guaranteed Loan Program

摘要

The study explores the various degrees of influence which loan-related fees have upon Business and Industry program effectiveness and makes recommendations for program improvement. It examines methods used by both lenders and packagers to realize unusually high and undue profitability through the government guarantee and specific cases are cited. The use of various fees is examined in the commercial (non-guaranteed) banking world and compared to their use and applicability in conjunction with guaranteed loans. It is determined that their use is often unjustified in light of the vastly different funding considerations of government guaranteed financing. Methods are developed which highlight such aberrations to assist in the overall management of the program.