Can an SBA lender charge origination fees or points?
Short answer
No. SOP 50 10 8.1, Section A, Chapter 4, Para. C.4 prohibits commitment, origination, broker, referral and similar fees, points, prepayment fees and renewal fees. Any lender fee not expressly permitted in 13 CFR § 120.221 is prohibited.
A 7(a) lender can charge only the fees SBA permits. SOP 50 10 8.1, Section A, Chapter 4, Para. C.4 (about p. 70) says any fee not expressly permitted in 13 CFR § 120.221 is prohibited.
What lenders and their Associates may not do
- Charge commitment, bonus, origination, broker, commission, referral or similar fees
- Charge points or add-on interest
- Charge prepayment fees or renewal fees
- Require you to pay them, or anyone they designate, for goods or services, including insurance, as a condition of the loan
- Share a Secondary Market premium with a Service Provider, Packager or other non-employee referral source
What a lender may collect
- Reasonable packaging fees, within SBA's limits
- Extraordinary servicing fees, with SBA's prior written approval
- Necessary out-of-pocket expenses
- Legal fees charged by the hour
- A late payment fee, up to 5% of the regular payment when more than 10 days late
- An assumption fee of no more than 1% of the balance
A fee with a different name still has to fit one of those categories. Ask for a written itemization, which the lender must give you (Para. C.2.a).
Brokers are different
A broker you hire may charge you for broker or referral services (Para. D.7), within SBA's fee limits.
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