What Is the SBA Guaranty Fee?
Understanding SBA 7(a) Loan Fees
Borrowers must pay a "guaranty fee" within 90 days of approval of an SBA loan. This fee is waived for qualified applicants in the Veterans Advantage program who obtain financing under $350,000. For all other borrowers, the guaranty fee corresponds to the amount of the loan.
For example, for loans between $150,001 and $700,000, the fee is 3% of the guaranteed portion. For loans between $700,001 and $5 million, the fee is 3.5% of the guaranteed portion for up to $1 million, and 3.75% of the guaranteed amount for more than $1 million.
Guaranty fees aim to shift the burden of administrative costs onto the borrower and away from the taxpayer. Entrepreneurs can use the proceeds of their SBA loans to pay the guaranty fee, and don't need to come up with these additional funds out of pocket.