Can SBA loan proceeds pay a broker or packager?
Short answer
It depends on who hired them. An agent the lender hires cannot be paid from proceeds, even from working capital (SOP 50 10 8.1, Sec. A, Ch. 4, Para. D.1.e). An agent you hire may bill you, but outside EWCP the SOP does not say those fees can be financed.
In this answer, EWCP means Export Working CapitalMoney for day-to-day costs such as payroll, rent and inventory. Full definition Program.
It depends on who hired the agent. Section A, Chapter 4, Paragraph D of SOP 50 10 8.1 treats the two cases differently.
An agent the lender hires
The lender must bill and pay that agent. It cannot pass the charge to you or pay it from proceeds "under any circumstances, including with loan proceeds allocated to working capital" (Para. D.1.e.iii). A Lender Service Provider's fees also cannot be passed to you or paid from proceeds (Para. D.6.c).
An agent you hire
A packager or broker you hire may bill you directly. Compensation must be reasonable and customary, and cannot depend on the loan being approved or closed (Para. D.1.d). Percentage fees cannot exceed 3% on loans of $50,000 or less. Above that, the cap is 2% up to the first $1,000,000 plus 0.25% on the portion over it, and $30,000 in aggregate (Para. D.7.c). Fees over $2,500 must be supported by documenting the service performed.
The Export Working Capital Program (EWCP) lists packaging fees among its eligible uses (Sec. B, Ch. 5, Para. B.3). For other 7(a) loans, the SOP does not say whether your own agent's fee can be financed. Ask the lender before you count on it.
Other rules brokers ask about
- An agent outside an SBA-reviewed LSP agreement goes on SBA Form 159 (Para. D.2.c).
- An SBA loan cannot refinance a debt where the creditor is an agent involved in the loan (Para. D.2.f).
- A lender and its Associates cannot charge you broker, commission or referral fees (Sec. A, Ch. 4, Para. C.4).
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