The MGA facilitates the guarantee process. For each specific loan transaction, a credit agreement must be executed by the lender, the borrower and DoD. A standard credit agreement has been developed for use in these transactions. A promissory note must also be executed by the borrower for the benefit of the lender to further evidence the credit. Fees DoD is required to fund all program costs through the assessment of fees. As described below, several types of fees are assessed at various stages of the process to cover these costs.
Fees are subject to change without notice.
The exposure fee covers the expected future cost to the U.S. government of a potential default by the borrower. The exposure fee is paid proportionately as the guaranteed loan is disbursed. The exposure fee must be paid by the borrower and shall not be included in the guaranteed loan amount. The administrative fee covers the cost of servicing the guarantee during the disbursement and repayment period. The parties to the transaction must decide who will pay the administrative fee and notify DELG at the time of application.