The October 1 Fee Reset: Why Women in Manufacturing, Food, and Rural Business Just Got the Cheapest SBA Financing in a Decade

The Fee Change in 30 Seconds

If you own a manufacturing business, a food production or distribution company, or any small business in a rural area, the SBA just handed you the cheapest fixed-rate commercial real estate financing available in the United States.

Starting October 1, 2026 (fiscal year 2027), the SBA 504 loan program resets its fee schedule for qualifying borrowers. Three changes stack on top of each other:

• Upfront guaranty fee: 0%. Previously 1.0% to 1.7% of the loan amount, depending on debenture size. Gone.
• Annual servicing fee: 0% for the full loan term. This fee — typically 0.3875% to 0.7734% per year — is eliminated for the entire 10-, 20-, or 25-year term. Not just year one. Every year.
• These apply to all qualifying 504 loans. No cap. No sunset date announced for FY2027.

This follows the FY2026 manufacturing fee waiver that we covered when it launched. But the October 1 reset is broader, deeper, and more permanent than what came before.

What Else Changed: The LTV and Refinancing Shifts That Compound the Savings

The fee elimination alone would be significant. But it landed alongside two structural changes to the 504 program that make it dramatically more accessible.

The LTV Increase: 90% Financing Is Now Standard

The SBA raised the maximum loan-to-value ratio on 504 loans from 85% to 90%. In practice, that means you put down 10% instead of 15% on a qualifying project.

On a $1 million property purchase:

• Old structure: $150,000 down payment required
• New structure: $100,000 down payment required
• Cash you keep in operations: $50,000

That $50,000 stays in your business. It covers payroll. It funds inventory. It is the difference between buying a building and buying a building while keeping the lights on.

The Refinancing Threshold: 75% Qualifying Replaces 85%

For 504 refinancing, the SBA dropped the qualifying threshold from 85% to 75%. This means more of your existing high-rate debt can be rolled into a 504 refinance.

If you are carrying expensive capital — an MCA, a high-rate online loan, a construction bridge loan that never got taken out — the bar to consolidate that debt into a fixed-rate 504 just dropped. The SBA CDC/504 refinance rules now allow refinancing when the existing debt covers at least 75% of the project cost, down from 85%.

Combined with the fee elimination, this is the cheapest path to refinancing expensive capital that has existed in the 504 program’s history.

The Dollar Math: What This Actually Saves on a $1M Loan

Numbers matter more than policy language. Here is what a woman borrowing $1 million through a 504 loan pays under the old fee schedule versus the October 1 reset.

Scenario: $1 Million 504 Loan, 20-Year Term

Upfront guaranty fee savings:

Annual servicing fee savings over a 20-year term:

Combined savings on a $1M loan over 20 years: $15,000 to $40,000 in direct fee savings — depending on the specific debenture structure and fee tier. On larger loans, the savings scale proportionally. A $2 million loan saves $30,000 to $80,000.

These are not rate reductions. These are fees that simply no longer exist. Your interest rate stays the same. Your monthly payment drops because there is no annual fee baked into the debenture rate.

Who Qualifies: Three Categories, and You Are Probably in One

The October 1 fee elimination covers three borrower categories. If you fall into any one of them, you qualify.

1. Manufacturers (NAICS 31–33)

Any business classified under NAICS sectors 31 through 33. This is not limited to heavy industry. It includes:

• Food production: specialty sauces, baked goods with wholesale distribution, meal kits, spice blending, fermented foods, candy, baby food
• Personal care: skincare, haircare, soap, essential oils, cosmetics
• Textiles and apparel: clothing manufacturing, leather goods, custom uniforms
• Other: jewelry, candles, printing, furniture, pottery, ceramics

Women own or co-own an estimated 36% of manufacturing firms in the United States, according to Census Bureau data on women-owned employer firms. The actual number is likely higher when you count sole proprietorships and partnerships that the Annual Business Survey undercounts.

If you make a physical product, you are probably classified as a manufacturer. Your NAICS code determines eligibility — not your headcount, not your revenue, not the size of your facility.

2. Food Supply Chain Businesses

The food supply chain category extends beyond manufacturing into distribution, processing, cold storage, grocery retail, and food logistics. This captures businesses that the manufacturing NAICS codes miss:

• Grocery stores and specialty food retailers
• Food distribution and wholesale operations
• Cold chain and refrigerated warehousing
• Farm-to-table supply chain businesses
• Food packaging and processing services

If your business touches food between the farm and the consumer’s plate, you likely qualify.

3. Rural-Area Businesses

Any small business located in a rural area as defined by the SBA qualifies for the fee elimination — regardless of industry. You do not need to be a manufacturer or food business.

The SBA’s rural designation generally aligns with USDA Rural Development eligible areas. If you operate outside a Metropolitan Statistical Area or in a community with fewer than 50,000 people, check your eligibility.

This is the category most women business owners overlook. If you moved your operations to a lower-cost area outside a major metro — which many women-owned businesses did during and after the pandemic — you may now qualify for fee-free 504 financing regardless of what you sell.

Why This Matters More for Women: The Down Payment and Fee Barrier

The commercial real estate ownership gap for women business owners is well documented. Women own 42% of U.S. businesses but hold a disproportionately small share of commercial real estate.

The 504 program has always been the best tool to close that gap. Fixed rates. Long terms. Below-market pricing. But fees and down payments created barriers that hit women borrowers harder for structural reasons:

• Women-owned businesses have lower median revenue. A $15,000 guaranty fee represents a larger share of available cash.
• Women are more likely to self-fund. When every dollar of startup capital came from personal savings, a $150,000 down payment versus a $100,000 down payment is not a rounding error. It is the deal falling apart.
• Women face higher scrutiny on cash reserves. Lenders routinely require women borrowers to demonstrate more months of operating reserves. Eliminating $15,000–$40,000 in fees means those dollars stay in the reserve account where the lender wants to see them.

The October 1 reset does not fix structural bias. But it removes real dollar barriers that compound the bias.

How to Apply: The 7-Step Process Before December 31

The fee reset is effective October 1. But 504 loans take 45 to 90 days to close. If you want to lock in FY2027 terms and close before year-end (to capture 2026 tax benefits on the property), start now.

Step 1: Confirm Your NAICS Code

Pull your most recent tax return. Your NAICS code is on your Schedule C (sole proprietor), Form 1065 (partnership), or Form 1120/1120-S (corporation). If it starts with 31, 32, or 33, you qualify as a manufacturer. If you are uncertain, call your local SBA district office and ask them to verify.

Step 2: Check Rural Eligibility

If you are not a manufacturer or food business, check whether your business location qualifies as rural. Use the USDA eligibility map or call your local Certified Development Company (CDC) — they will know immediately.

Step 3: Find a CDC

The 504 loan is a three-party transaction: you, a conventional lender (bank or credit union), and a Certified Development Company. The CDC handles the SBA-backed portion of the loan. Find one through the SBA Lender Match tool or ask your existing bank which CDCs they work with.

Not all CDCs are equally responsive. Ask how many 504 loans they closed in the last 12 months. If the answer is fewer than 20, keep looking. TMC Financing’s FY2027 update is a useful summary of the current program terms to bring into that conversation.

Step 4: Assemble Your Application Package

Standard 504 documentation includes:

• Three years of business tax returns
• Three years of personal tax returns
• Year-to-date profit and loss statement and balance sheet
• Business debt schedule (every loan, line of credit, and obligation)
• Personal financial statement (SBA Form 413)
• Business plan or expansion narrative
• Purchase agreement or lease for the property (if identified)
• Environmental questionnaire for the property

Get this assembled before you contact the CDC. Showing up with a complete package signals you are serious and accelerates the timeline.

Step 5: Get Pre-Qualified

The CDC and your bank will run a preliminary analysis of your financials. This is not a commitment — it is a reality check on loan size, terms, and likelihood of approval. Ask for the pre-qualification in writing, including the estimated fee schedule (which should show $0 for the guaranty fee and annual servicing fee).

Step 6: Submit and Track

Once you formally apply, the CDC submits to the SBA for authorization. Current processing times vary by district — 30 to 60 days is typical. Ask your CDC for a specific timeline and hold them to it.

Step 7: Close Before Year-End (If Possible)

A 504 loan that closes before December 31 lets you claim first-year depreciation on the property and equipment for tax year 2026. This is not always achievable — real estate transactions have their own timeline. But if you are already under contract on a property, the fee reset is one more reason to push for a 2026 close.

Three Mistakes That Will Cost You the Savings

1. Assuming Your Lender Knows About the Fee Reset

Many commercial bankers do not track SBA program changes in real time. If your banker says “504 fees are standard,” push back. Bring the TMC Financing FY2027 summary or the SBA’s own program page. The fee reset is policy, not a promotion — it does not depend on your lender’s awareness.

2. Waiting for Rates to Drop Further

The fee elimination is a known quantity. Future rate cuts are speculation. A $15,000 fee waiver today is worth more than a hypothetical 25-basis-point rate cut that may or may not arrive in Q2 2027. Lock the savings that exist.

3. Applying Without Checking Your NAICS Code First

If your tax returns show the wrong NAICS code — and many do, because the code was assigned years ago and never updated — you may need to amend before applying. A food company that was classified as “retail” when it started but now manufactures and distributes wholesale may be sitting on a wrong code that costs $40,000 in available savings. Verify before you apply.

The Window Is Open. Walk Through It.

The SBA does not do this often. Zero upfront fees. Zero annual servicing fees. Ninety percent financing. Easier refinancing thresholds. All at once, all for the same borrower categories.

This is not a permanent state. Fee waivers are authorized annually. The LTV and threshold changes could be reversed by a future administration. What exists right now — starting October 1, 2026 — is the most favorable 504 financing structure in over a decade.

If you are a woman who manufactures a product, runs a food business, or operates in a rural area, the math has never been this clear.

The fees are zero. The down payment is lower. The refinancing bar dropped. The only cost left is waiting.

This article is part of HerCapital’s ongoing coverage of SBA 504 program changes. For the earlier manufacturing fee waiver, read The Manufacturing Fee Waiver. For what the broader October 1 SBA rule changes mean, see The October Acquisition Cliff. For a week-by-week countdown, see The October 1 Lending Countdown.

All fee schedules and program terms referenced are based on SBA 504 program updates effective October 1, 2026 (FY2027). Program terms are subject to change. Consult a Certified Development Company or SBA district office for current terms applicable to your specific situation.

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