One key aspect that small business owners encounter when applying for Small Business Administration (SBA) loans is the SBA guarantee fee. This fee is a critical component of the loan process, yet it can cause confusion and questions among entrepreneurs. In this guide, we'll explain everything you need to know about it, including its associated costs, how it's calculated, and implications for your loan.

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New to SBA loans? Start with our overview of SBA loan options to explore types, terms, and how they work.

What is the SBA guarantee fee?

Because SBA loans are guaranteed up to 50-90% by the Small Business Administration, lenders pay guarantee (or guaranty) fees for some types of financing they issue under the program. These fees help cover the SBA’s costs in the event that a borrower defaults on a loan.

Although the guarantee fee is charged to the lender, the SBA allows lenders to pass the fee onto the borrower. Most lenders will typically do this.

Which SBA loans have guarantee fees?

Not every type of SBA loan will have a guarantee fee assessed. You can expect them for 7(a) and 504 loans, but not for SBA microloans. It’s also important to note that the guarantee fee is assessed only on the portion of the loan guaranteed by the SBA - not the total approved loan amount.

SBA guarantee fee costs (by program)

SBA guarantee fees are based on the guaranteed amount on your SBA, the type of SBA loan, and your repayment term.

SBA 7(a) loan guarantee fees

Guarantee fees for SBA 7(a) loans change each fiscal year. Usually, the SBA will publish updates to lender fees for the coming fiscal year in advance. However, in March 2025, the SBA published an update to lender fees in effect for the remainder of the fiscal year, which means 7(a) loans issued prior to March 27, 2025, and 7(a) loans issued after March 27, 2025 have different fees associated. 

Both are included in the tables below.

Guarantee fees for 7(a) loans issued after March 27, 2025

Loan amount SBA guarantees SBA guarantee fee (loan term 12 months or less) SBA guarantee fee (loan term more than 12 months)
$150,000 or less 85% of the loan 0.25% 2%
$150,001 - $700,000 75% of the loan 0.25% 3%
$700,000 - $5,000,000 75% of the loan* 0.25% 3.5% of the guaranteed portion of the loan up to and including $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000.

Guarantee fees for 7(a) loans issued before March 27, 2025

Loan amount SBA guarantees SBA guarantee fee (loan term 12 months or less) SBA guarantee fee (loan term more than 12 months)
$1,000,000 or less 85% of the loan 0.0% 0%
$1,000,001 - $5,000,000 75% of the loan* 0.25% 3.5% of the guaranteed portion of the loan up to and including $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000.

*The SBA guarantees a maximum of $3.75 million on 7(a) loans.

SBA Express loan guarantee fees for veterans

For SBA express loans made to businesses owned and controlled by a veteran or the spouse of a veteran, the guarantee fee is $0.

Export Working Capital Loans guarantee fees

Export Working Capital Program loans, another type of 7(a) loan, also have their own guarantee fee structure depending on the maturity term of the loan.

Maturity Guarantee fee
12 months or less .25%
13-24 months .525%
25-36 months .80%

SBA 504 loan guarantee fees

Similar to the 7(a) program, the SBA publishes guarantee fees for the 504 loan program to remain in effect for the coming fiscal year.

Since the 504 program has a two-part funding structure, consisting of a portion of funding from the borrower, from a Certified Development Company (CDC), and a third-party lender, the SBA guarantee fee applies only to the CDC portion of the loan.

For the 2025 fiscal year, there is no guarantee fee on SBA 504 loans. However, the lender can charge the SBA’s annual service fee to the borrower for these loans, which is currently 0.331% for the 2025 fiscal year.

How are SBA guarantee fees calculated?

Calculating the SBA guarantee fee can seem complex, but once you understand the calculations behind it, it's much more manageable. Here is a simplified process:

  1. Identify the guaranteed portion: Determine the amount of the loan that the SBA guarantees. This typically ranges between 50%-90% of the entire loan, depending on the specific SBA loan program.
  2. Apply the fee structure: Using the fee rates provided by the SBA, which vary depending on the size and term of the loan, calculate the fee charged on the guaranteed portion.
  3. Total loan cost: Add up the fee amount and any additional associated loan costs to understand the total cost of the loan.

Remember, the fee is based on the guaranteed portion of the loan, not the total loan amount, which means that the actual amount paid can be less than the full percentage of the entire loan.

Reach out to your SBA lender for assistance if you are having difficulties calculating potential guarantee fees. You can also check out the SBA’s online calculator to determine your guarantee fees.

Additional SBA 7(a) loan fees

Beyond the guarantee fee, small business owners should be aware of other potential charges associated with an SBA 7(a) loan. Here's a breakdown of other fees that the SBA allows lenders to collect from borrowers:

Packaging fees

Lenders can charge borrowers service and packaging fees for the SBA loan. This can take a few forms and structures, so it's important to understand what they are. These fees are for things like:

  • Completing an application
  • Completing documents related to an application, like business plans or cash flow projections
  • Software or tech used to prepare documents

Here’s how packaging fees can be structured:

Flat fee:

The SBA allows lenders to charge a flat fee of up to $2,500 per loan without documenting services performed. Flat fees of above $2,500 require the lender to provide itemization and documentation to the SBA.

Hourly rate:

For packaging fees charged on an hourly rate, the fees must be reasonable and customary for the services performed. It must also be consistent with fees the lender charges on an hourly rate for similarly-sized non-SBA loans.

Percentage of loan amount:

For packaging fees structured as a percentage of the loan amount, the fee can’t exceed either: what the lender charges on a percentage basis for similar-sized non-SBA loans, or the following (whichever is less):

  • For loans $150,000 or less: 5% of the loan amount
  • For loans $150,001 or more: 3% of the loan amount

If the packaging fee is structured as a percentage of the loan amount, it cannot be more than $30,000.

Extraordinary Servicing fees

Extraordinary servicing fees are charged when your loan requires intensive, out-of-the-ordinary servicing. Examples of this could be: loan workouts, special monitoring, or complex restructures.

The fee must be reasonable and justified based on the services performed, and is subject to SBA approval. The fee can’t exceed 2% of the portion of the loan requiring the extraordinary servicing on most 7(a) loans, with the exception of EWCP loans and CAPlines.

Extraordinary Servicing fee limits for EWCP and CAPLine

Lenders can charge extraordinary servicing fees more that 2% on EWCP and Working Capital CAPlines that are disbursed on a Borrowing Based Certificate. However, these fees must be reasonable based on the extraordinary effort required, and can’t be higher than fees charged on a lender’s similarly-sized, non-SBA commercial loans.

Out-of-pocket expenses

You may see out-of-pocket expenses charged with your SBA loan. These cover necessary expenses for the lender, and typically include: filing or recording fees, photocopying, delivery charges, appraisal fees, and necessary reports.

Each out-of-pocket expense must be itemized and kept in the file for review by the SBA at any time.

You may have to reimburse your lender for any direct costs (including overhead) incurred for legal services by in-house counsel. However, these fees can’t exceed the cost of outside counsel, and must be assessed on an hourly basis.

Late payment fee

If you are more than 10 days delinquent on your regularly scheduled SBA loan payment, your lender can charge a late payment fee. It can’t exceed more than 5% of the regular loan payment.

Additional SBA 504 loan fees

Additional allowed fees for 504 loans differ in structure from 7(a) loans, and may be paid to several parties to the loan. Before you review the breakdown, here’s a quick refresher on some loan terminology that differs from 7(a) loans that you’ll see in use below.

  • ‍Debenture: a loan funded by investors‍
  • Net Debenture: the amount of the SBA portion of your loan that’s actually available for your project after required fees are taken out, or your take-home amount of the loan.‍
  • Gross Debenture: the total amount raised through the debenture to fund the SBA portion of the loan, or the sticker price before any fees are deducted.
Additional fees for SBA 504 loans
Additional 504 loan fees Amount Who you're paying
Processing (or Packaging) fee Up to 1.5% of net debenture CDC
Closing fee Maximum of $10,000 from debenture proceeds CDC
Monthly servicing fee

Based on unpaid principal of the loan

Minimum of 0.625% per year

Maximum of 2% a per year, unless project is in rural area (1.5%)

 CDC
Late fees

Charged for loan payments received after the 15th of each month

5% of the late payment, or $100 (whichever is greater)

 Central Servicing Agent, on behalf of CDC
Assumption fee Maximum 1% of the outstanding principal balance of loan being assumed CDC
Initiation fee Determined by contract between Central Servicing Agent (CSA) and SBA CSA
On-going fees Determined by contract between Central Servicing Agent (CSA) and SBA >CSA
Underwriter fee for 20-25 year debentures Upfront fee of 0.4% Underwriter
Underwriter fee for 10-year debenture Upfront fee of 0.375% Underwriter
SBA guarantee fee 0% for 2025 fiscal year SBA
Annual fee 0.331% of outstanding balance for 2025 fiscal year The SBA charges the lender this fee, but the lender may pass on to the borrower
Debt refinancing without expansion supplemental fee Additional .025% added to annual fee for loans under the Refinance Without Expansion program SBA
Funding fee .25% of the net debenture proceeds SBA

Conclusion

For small business owners accessing capital through SBA loan programs, understanding the SBA guarantee fee is fundamental. It's just as important to plan for this expense as it is to forecast other business costs. Always make sure to assess the full picture of loan costs and discuss any fee-related questions with your SBA-approved lender.

With careful consideration, the SBA's programs can be a powerful tool in growing and sustaining your business. Your efforts to comprehend the fee structures will position you to make well-informed financial decisions that keep your business's bottom line healthy. Remember, staying informed about the costs of borrowing is essential in the stewardship of your enterprise.