Understanding SBA 7(a) Loan Fees
The lender must pay SBA a guaranty fee within 90 days of loan approval (within 10 business days for a loan of 12 months or less) and may pass the cost to the borrower. SBA waives this fee on SBA Express loans, which top out at $500,000, to businesses owned and controlled by a veteran or a veteran’s spouse. That waiver is set by statute and outlasted the Veterans Advantage program, which ended in 2018. For all other borrowers, the guaranty fee corresponds to the amount of the loan. The SBA guaranty fee calculator works out the FY2027 fee for any amount.
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.
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Related Questions
What is the purpose of the SBA guaranty fee?
The purpose of the SBA guaranty fee is to shift the burden of administrative costs onto the borrower and away from the taxpayer. The fee can be based on either the dollar amount of the guaranteed portion of the SBA loan, or the repayment term of the SBA loan. The SBA guarantee fee can range from 0% to 3.75% of the SBA guaranteed loan amount, and can be included in the borrower’s overall SBA loan proceeds.
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 amount for up to $1 million, and 3.75% of the guaranteed amount for more than $1 million.
If the SBA guarantee fee is based on the repayment term of the SBA guaranteed loan, any loan with a term of 1 year or less will have a 0.25% guarantee fee, while longer terms pay 2% to 3.75% of the guaranteed portion under the standard schedule for loans approved October 1, 2025 through September 30, 2027 (SBA Information Notices 5000-872051 and 5000-881797), depending on the loan amount, and loans that qualify for a fiscal-year exception open to all borrowers, such as some loans to manufacturers, pay 0%.
How much is the SBA guaranty fee?
The SBA guaranty fee can be based on either the dollar amount of the guaranteed portion of the SBA loan, or the repayment term of the SBA loan. The SBA guarantee can be 75% to 85% of your loan and the guarantee fee owed by the borrower can range from 0% to 3.75% of the SBA guaranteed loan amount. The good news is, this fee can be included in the borrower’s overall SBA loan proceeds -- so you don’t have to worry about paying it upfront.
Here’s a couple of examples:
- For a $150,000 loan, the SBA guaranty fee is $2,550 or 2% of the guaranteed portion (85%).
- For a $5,000,000 loan (75% SBA guaranty of $3,750,000), the loan fee is $138,125 calculated as 3.5% of the first $1 million guaranteed ($35,000) plus 3.75% of the remaining guaranteed amount.
If the SBA guarantee fee is based on the repayment term of the SBA guaranteed loan, any loan with a term of 1 year or less will have a 0.25% guarantee fee, while longer terms pay 2% to 3.75% of the guaranteed portion under the standard schedule for loans approved October 1, 2025 through September 30, 2027 (SBA Information Notices 5000-872051 and 5000-881797), depending on the loan amount, and loans that qualify for a fiscal-year exception open to all borrowers, such as some loans to manufacturers, pay 0%. The length of repayment terms can vary and be as high as 10 years for working capital loans or 25 years for commercial real estate loans.
What is the difference between the SBA guaranty fee and the SBA loan fee?
They are the same charge. ‘SBA loan fee’ is another name for the SBA guaranty fee, which SBA calls the upfront fee: a one-time percentage of the guaranteed portion of the loan. The lender pays it to SBA, within 90 days of loan approval for loans with terms over 12 months, and can pass it on to the borrower. The fee is based on either the dollar amount of the guaranteed portion of the SBA loan, or the repayment term of the SBA loan.
For example, for loans approved October 1, 2025 through September 30, 2027 with a term over 12 months, the fee is 3% of the guaranteed portion for loans between $150,001 and $700,000, and 3.5% of the guaranteed portion up to $1 million plus 3.75% of the guaranteed portion over $1 million for loans between $700,001 and $5 million.
The good news is, the SBA guaranty fee can be included in the borrower’s overall SBA loan proceeds, so you don’t have to worry about paying it upfront.
How does the SBA guaranty fee affect the cost of a loan?
The SBA guaranty fee is passed on to the borrower by the lender and can be included in the borrower’s overall SBA loan proceeds. The fee can be based on either the dollar amount of the guaranteed portion of the SBA loan, or the repayment term of the SBA 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. The SBA guaranty fee aims 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.
Sources:
What are the benefits of paying the SBA guaranty fee?
The SBA guaranty fee is beneficial to small business owners because it shifts the burden of administrative costs away from the taxpayer and onto the borrower. Additionally, the fee can be included in the borrower’s overall SBA loan proceeds, so they don’t have to worry about paying it upfront. The fee can range from 0% to 3.75% of the SBA guaranteed loan amount, depending on the amount of the loan and the repayment term.
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. Additionally, any loan with a term of 1 year or less will have a 0.25% guarantee fee, while longer terms pay 2% to 3.75% of the guaranteed portion under the standard schedule for loans approved October 1, 2025 through September 30, 2027 (SBA Information Notices 5000-872051 and 5000-881797), depending on the loan amount, and loans that qualify for a fiscal-year exception open to all borrowers, such as some loans to manufacturers, pay 0%.
Sources:
- www.sbaexpress.loans/sba-express-glossary/what-is-the-sba-guaranty-fee
- www.sba7a.loans/sba-7a-loans-small-business-blog/how-does-the-sba-guarantee-loans
- SBA Information Notice 5000-872051
- SBA Information Notice 5000-881797
- /sba-express-glossary/2017/5/12/what-is-the-sba-veterans-advantage-program
- /sba-7a-loan-for-working-capital
- /sba-7a-loan-for-commercial-real-estate/