SBA Form 159: Fee Disclosure and Compensation Agreement

Who completes it

The lender, applicant and each paid agent sign it when an agent helps with a 7(a) or 504 application (Form 159 instructions).

When it is used

By closing on 7(a) loans (SOP 50 10 8.1, Sec. B, Ch. 6, Para. D.4). On 504 loans it goes in the application file (Sec. C, Ch. 1, Para. F.2.a.ix). The lender or CDC uploads it to SBA after funding (Sec. A, Ch. 4, Paras. D.8.e and E.7).

What it asks

• The loan type, SBA loan name and 10-digit loan number, and the lender's legal name and SBA location ID.
• The agent's name, contact person, address and type: lender, packager, referral agent or broker, consultant, accountant, third party lender or other.
• Each service and the amount paid by the applicant or by the lender: packaging, financial statement preparation, broker or referral, consulting or other.
• Total compensation paid by the applicant and by the lender.
• An itemization with supporting documents when the agent's compensation exceeds $2,500. It shows the work done, whether the fee is hourly or a percentage, and the hours and rate if hourly.
• For 504 loans, any referral fee a certified development company received from a third party lender.
• Separate certifications signed by the applicant, the agent and the lender.

A filled-in example

This example is made up. Sample Bakery LLC, the people, the lender and every figure are fictional, and the ID numbers are zeros. It shows what finished entries look like, using the form's own field names.

An example only. Use your own facts on the real form, and check that your copy is the edition named above.

Common mistakes

• Signing before the form is complete. The form says you must not sign until all required services and fees are disclosed.
• Agreeing to a contingency fee. SBA does not allow fees paid only if the loan is approved or closed (SOP 50 10 8.1, Sec. A, Ch. 4, Para. D.2.e).
• Assuming small fees need no form. Any paid agent needs one. The $2,500 line only triggers itemization of the agent's compensation (Para. D.8.d.ii).
• Missing the lender's own fee. A lender charging you more than $2,500 must complete Form 159 too (Para. C.2.a.v).
• Paying one agent from both sides. You and the lender can both pay an agent only for different services. That means packaging paid by you and a referral fee paid by the lender (Para. D.2.d).
• Using one form for several agents or loans. Each agent and each application needs its own form. Fees from the same agent are added together for the $2,500 test (Para. D.8.c and D.8.d.ii.a).
• Paying a fee your lender owes. Fees a lender pays a Lender Service Provider cannot be passed on to you (Para. D.2.b).
• Listing people who are not agents. Your regular accountant, a closing attorney, the lender's appraiser and a commissioned real estate agent do not complete this form (Para. D.8.d.iii).
• Reporting closing costs here. Out-of-pocket items such as recording fees stay off Form 159 but must be available for SBA review (Para. C.2.c.iii).
• Missing the upload window. A 7(a) lender has two Form 1502 reporting cycles from first disbursement (Para. D.8.e). A CDC has 30 calendar days after the debenture funds (Para. E.7).