Understanding SBA 7(a) Loan Fees
The St Louis District Office frequently answers questions for our lenders related to fees on SBA loans, so we wanted to go over a few points. SBA collects loan guaranty fees so entrepreneurs (not the United States taxpayers) bear much of the cost of funding SBA’s financial assistance programs. Guaranty fees are due within 90 days of the date of loan approval and may be financed with the proceeds of the SBA-guaranteed loan.
Entrepreneurs often need capital to start or grow their small business and realize that there is a cost of capital. Small business owners often find the fees associated with obtaining an SBA loan more attractive than the cost of other capital options. For example, for a $150,000 loan, the SBA guaranty fee is $2,550 or 2% of the guaranteed portion (85%). For a $5,000,000 loan (75% SBA guaranty of $3,750,000), the loan fee is $138,125 calculated as 3.5% of the first $1 million guaranteed ($35,000) plus 3.75% of the remaining guaranteed amount. We urge lenders to refer to SBA Standard Operating Procedure (SOP) 50-10-5(E) to determine the exact guarantee fee that will be due on a specific SBA-guaranteed loan.
Lenders can’t charge a separate loan origination fee on an SBA guaranteed loan. Lenders can charge “packaging fees” but the fees must be reasonable and customary for the services actually performed and must be consistent with those fees charged on the lender’s similarly-sized non-SBA guaranteed commercial loans. Fees charged an SBA borrower must be documented on SBA Form 159 (7a), signed by all pertinent parties and faxed to Colson Services at time of loan disbursement. This is cited on pages 173- 74 of SOP 50-10-5(E).
This article provides some additional insight into SBA 7a loan fees.
You can read more about SBA guaranty fees beginning on page 162 of SOP 50-10-5(E).