The Small Business Administration charges guaranty fees on loans to cover the government’s loan administration costs and costs when a borrower defaults. There are both borrower and lender fees that help ensure the sustainability of the SBA program. Borrowers pay a one-time, up front guaranty fee and lenders pay an ongoing lender fee for the life of the loan. To better understand how SBA loan fees work and what the savings opportunities could be, here is a breakdown of the most common questions about SBA loan fees.
How much is the SBA 7(a) loan guarantee fee?
The SBA determines program fees each fiscal year. These fees are universal no matter which lender you choose to work with. The fee is calculated by taking both the loan amount and the loan term into consideration. In general, larger loan amounts and longer terms equate to a larger fee percentage. However, the fee is only based on the portion the SBA guarantees.
The following shows the guaranty fee on loans with a maturity that exceeds 12 months.
For loans with a maturity that exceeds 12 months, the Upfront Fees* are:
For loans of $150,000 or less: 2% of the guaranteed portion. The Lender may retain no more than 25% of the fee (i.e., at least 1.5% must be remitted to SBA).
For loans of $150,001 to $700,000: 3% of the guaranteed portion.
For loans of $700,001 to $5,000,000: 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.
*Fees as of April 1st, 2025
Please note that the guaranty fee is calculated differently when you request multiple loans within 90 days of each other.
Let’s walk through an example.
Kate, a small business owner who is acquiring an investment advisory firm, secures a $1,500,000 SBA 7(a) loan with a 10-year term, which means that the SBA guaranty fee is 1.45% for the first $1 million and 1.7% on the remaining $500,000. But Kate is not responsible for paying 1.45% of $1 million or 1.7% of the remaining $500,000 – she only pays 1.45% and 1.7% on the guaranteed portion. The SBA guarantees 75% of all 7(a) loans over $150,000. She is responsible for paying 1.45% of $1,000,000 = $14,650 and 1.7% of $125,000 = $2,125 for a total of $16,625.
For loans $2,000,001 - $5 million, the fee is 3.5% of the first $1 million guaranteed ($35,000) plus 3.75% of the remaining guaranteed amount. This math can get confusing, so discuss the specifics with your Live Oak loan expert.
What other fees can be expected with SBA loans?
As we guide our borrowers through the loan process, Live Oak will walk them through any additional fees. Some of these include packaging, servicing and possibly prepayment penalty fees. We work diligently to educate our borrowers and ensure they fully grasp these fees.
At Live Oak Bank, we are committed to the success of small business owners nationwide. Learn more about small business loans and SBA loans from Live Oak.
