Can a broker charge me only if my SBA loan closes?
Short answer
No. SBA does not allow contingency fees, meaning fees paid only if the loan is approved or closed. SOP 50 10 8.1, Section A, Chapter 4, Paras. D.2 and D.7 and SBA Form 159 all state that rule.
SBA bars success-only fees on 7(a) loans. SOP 50 10 8.1, Section A, Chapter 4, Para. D.2.e (about p. 73) says SBA does not allow contingency fees, defined as fees paid only if the loan is approved or closed. Para. D.7 repeats the ban for fees charged to applicants. SBA Form 159 (p. 1) says the same.
Percentage fees are not the same thing
An Agent may charge a percentage of the loan amount, within SBA's limits. The fee still cannot depend on whether the loan closes. If an agreement says you owe nothing unless you are funded, that is a contingency term. Ask what you owe if the loan is declined or withdrawn.
Related bans
- An Agent may not charge a standard or flat fee to all applicants (Para. D.7).
- An Agent may not bill for services not reasonably necessary to the application.
- When a lender pays an Agent for paperwork through closing, that pay cannot depend on approval or closing (Para. D.1.e).
Consequences
SBA may review fees at any time. An Agent must refund any fee SBA finds unreasonable or impermissible. A violation of the Form 159 rules can lead to suspension or revocation of the privilege to do business with SBA (Form 159, p. 2).
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