SBA loans
SBA Loan Fees Explained: Guaranty Fee, Packaging and Closing Costs
The interest rate is only part of what an SBA loan costs. Here is every fee on a 7(a) or 504 loan under the FY2027 schedule that took effect on 1 October 2026 — the upfront guaranty fee, the annual service fee, packaging, closing and prepayment charges — who pays each one, and who pays nothing at all.
What Fees Do SBA Loans Charge?
For fiscal year 2027 (loans approved 1 October 2026 to 30 September 2027) an SBA 7(a) loan carries an upfront guaranty fee of 2% to 3.75% of the guaranteed portion, usually financed into the loan, plus an annual service fee of 0.55% of the guaranteed balance that the lender pays and prices into your rate. Manufacturers, food supply chain businesses and businesses in rural areas pay no upfront fee on 7(a) loans of $700,000 or less, and veteran-owned businesses pay none on SBA Express. SBA 504 debentures carry a 0.50% upfront fee and a 0.203% annual fee, waived entirely for the same three groups. On top of the SBA’s fees expect lender packaging, closing and third-party costs that typically run $2,000 to $7,500 on a working-capital loan and more on real estate.
The Upfront Guaranty Fee (FY2027)
The guaranty fee is what the SBA charges for standing behind the loan. It is calculated on the guaranteed portion — 85% of loans up to $150,000, 75% above that, 50% on SBA Express — not on the full loan amount. The lender pays it to the SBA within 90 days of approval and almost always passes it to the borrower, usually by adding it to the loan balance.
| Loan amount | Upfront fee (% of guaranteed portion) | Example: fee in dollars |
|---|---|---|
| $150,000 or less | 2.00% (lender may keep up to 25%) | $100,000 loan: 85% guaranteed = $85,000; fee $1,700 |
| $150,001 to $700,000 | 3.00% | $400,000 loan: 75% guaranteed = $300,000; fee $9,000 |
| $700,001 to $1,000,000 | 3.50% | $1,000,000 loan: $750,000 guaranteed; fee $26,250 |
| $1,000,001 to $5,000,000 | 3.50% on the guaranteed portion up to $1,000,000, plus 3.75% on the guaranteed portion above | $2,000,000 loan: $1,500,000 guaranteed; fee $35,000 + $18,750 = $53,750 |
| Any loan with a term of 12 months or less | 0.25% | $300,000 short-term loan: fee $562.50 |
Upfront guaranty fee in dollars, by loan size (FY2027, standard 7(a))
Assumes 85% guarantee up to $150,000 and 75% above. Loans to multiple borrowers approved within 90 days are combined for the calculation.
Who Pays No Upfront Fee
The FY2027 notice widened last year’s manufacturer-only waiver into three groups, and lowered the loan size it covers from $950,000 to $700,000.
- Manufacturers (NAICS sectors 31–33): 0% upfront fee on 7(a) loans of $700,000 or less, and 0% upfront and annual fees on 504 loans of any size.
- Food supply chain businesses on the SBA’s listed NAICS codes (growers, processors, distributors and certain refrigerated, farm, grain and livestock trucking): same waivers.
- Businesses located in rural areas, as defined in the notice: same waivers.
- Veteran-owned businesses: 0% upfront fee on SBA Express loans, by statute.
The Annual Service Fee
The lender pays the SBA an ongoing fee of 0.55% per year of the guaranteed portion of the outstanding balance. It is not charged to you as a line item, but lenders build it into the interest rate they offer, which is one reason SBA rates sit where they do inside the cap. On 504 loans the annual fee on the CDC debenture is 0.203% (0.204% for debt refinancing without expansion) and is included in the published effective rate.
Lender, Packaging and Closing Fees
The SBA limits what lenders and agents can charge, and every fee has to be disclosed on SBA Form 159. Typical items:
| Fee | Who charges it | Typical range | Notes |
|---|---|---|---|
| Packaging fee | Lender or loan packager | $1,500–$5,000 | Must be reasonable and disclosed on Form 159 |
| Extraordinary servicing fee | Lender | Up to 2% per year | Only on loans needing unusual servicing, e.g. asset-based lines |
| Closing costs | Lender, title, attorney | $1,000–$5,000 working capital; more with real estate | Document preparation, UCC filings, title, recording |
| Appraisal | Third party | $2,000–$5,000+ | Real estate; business valuation on acquisitions |
| Environmental report (Phase I) | Third party | $1,500–$3,500 | Commercial real estate |
| Quality of earnings report | Third party | $10,000+ | Business purchases of $3 million or more since October 2026 |
| Life and hazard insurance | Insurer | Varies | Hazard insurance required on collateral over $50,000 |
| Broker fee | Broker | Varies | RAN Funding is paid by the funder on most products; any borrower-paid fee is disclosed in writing |
What lenders may not charge: points, commitment fees, or fees for the SBA guarantee beyond passing through the actual guaranty fee. If a fee is not on Form 159, ask why.
Prepayment Penalties
Most 7(a) loans can be prepaid without penalty. The exception is a loan with a term of 15 years or longer (typically real estate): prepaying 25% or more of the balance in the first year costs 5% of the amount prepaid, 3% in the second year and 1% in the third, with no penalty after that. SBA 504 debentures carry a declining prepayment premium over roughly the first half of the term, starting near the debenture rate. Ask for the prepayment schedule in writing before closing.
What an SBA Loan Costs in Total
Here is a complete picture for a $400,000 working-capital 7(a) loan to a non-manufacturing business, 10-year term, at a 9.5% variable rate (below the 11.50% cap for that size at 7.00% Prime).
| Item | Amount |
|---|---|
| Upfront guaranty fee (3% of $300,000 guaranteed) | $9,000 (financed) |
| Packaging fee | $2,500 |
| Closing costs and filings | $1,500 |
| Total fees at closing | $13,000, about 3.25% of the loan |
| Monthly payment on $409,000 over 10 years at 9.5% | About $5,293 |
| Interest over 10 years | About $226,000 |
| Effective APR including fees | About 10.2% |
Illustrative; your lender’s pricing will differ. For comparison, a short-term product that funds in 48 hours can carry an effective annual cost two to four times higher. That gap is the reason SBA is worth the wait for a planned investment, and the reason it is the wrong tool for a three-week cash gap. See current SBA loan rates and factor rate vs APR.
How to Pay Less in SBA Fees
- Check whether you qualify for a waiver. Manufacturing, food supply chain and rural-area businesses pay no upfront fee on loans of $700,000 or less.
- Keep the loan at or under $150,000 if the need allows. The fee drops from 3% to 2% and the guarantee rises to 85%.
- Consider SBA Express for amounts up to $500,000: the fee is charged on a 50% guaranteed portion, so it is half the dollars.
- Do not finance a fee you can pay from cash if you expect to prepay; financed fees accrue interest for the full term.
- Get Form 159 before closing and question anything you do not recognize.
Common Questions
How much is the SBA guaranty fee in 2026?
For loans approved from 1 October 2026 (FY2027), the upfront fee is 2% of the guaranteed portion on loans of $150,000 or less, 3% from $150,001 to $700,000, 3.5% from $700,001 to $1 million, and 3.5% plus 3.75% on the guaranteed portion above $1 million. Manufacturers, food supply chain and rural businesses pay 0% on loans up to $700,000.
Is the SBA guaranty fee paid upfront or financed?
Either. The lender pays the SBA within 90 days of approval and recovers it from the borrower; most borrowers choose to have it added to the loan balance rather than pay it at closing.
Does the SBA charge an annual fee?
The lender pays an annual service fee of 0.55% of the guaranteed outstanding balance on 7(a) loans. It is not billed to the borrower directly but is reflected in the interest rate.
Are there SBA loan fees for manufacturers in 2026?
Not upfront. Under the FY2027 schedule, 7(a) loans of $700,000 or less to manufacturers (NAICS 31–33) carry a 0% upfront guaranty fee, and 504 loans to manufacturers carry no upfront or annual SBA fee at any size.
Do SBA loans have prepayment penalties?
Only on 7(a) loans with terms of 15 years or more, when 25% or more of the balance is prepaid in the first three years: 5% in year one, 3% in year two, 1% in year three. Shorter-term 7(a) loans have no SBA prepayment penalty. 504 debentures have a declining prepayment premium.
Sources
- Information Notice 5000-881797: FY 2027 7(a) Program Fees — U.S. Small Business Administration
- SBA issues notices announcing FY 2027 7(a) and 504 loan program fees — NAGGL
- 7(a) loan program — U.S. Small Business Administration
- SOP 50 10 8.1 changes effective 1 October 2026 — StatementsReady
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