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Some of the most competitive business loans on the market are supported by Small Business Management (SBA). However, SBA does not guarantee a portion of each SBA loan and work with external lenders to issue loans directly to businesses.
Like any other loan, SBA loans cost a fee. The main thing that most borrowers need to consider is the guarantee fee. This additional fee ranges from 0.00% to 3.75% of the guaranteed portion of the loan. Costs vary widely based on the amount of loan and the duration of the repayment. However, some loans do not have a guarantee fee or you can be exempt from the guarantee fee.
What is the SBA guarantee fee?
Unlike traditional bank business loan origination fees, if your business is the default for a loan, you will be charged a guaranteed fee to cover the costs. The lender is technically liable for paying the guarantee fee, but in many cases, he will pass additional costs to the borrower. This means you are responsible for paying it, whether it is wrapped in the total cost of the loan or deducted from the funds the business receives.
The SBA evaluates the guaranteed fees for loans under the 7(a) and 504 programs, but is not an SBA microloan. Fees will only be charged for the guaranteed portion of the loan. Since SBA only guarantees 75% to 90% of each loan, your business will not pay a guaranteed fee for the full amount that is approved to borrow.
SBA Guaranteed Fees
Your business will pay a guaranteed fee based on the loan amount guaranteed by the SBA and your repayment period. That changes every year. The table below reflects the 2025 fiscal year from October 1, 2024 to September 30, 2025.
Guaranteed fees for SBA 7(a) loans range from 0.00% to 3.75%.
| Standard 7 (a) Loan amount | SBA Guaranteed | SBA guarantee fees for less than 12 months | SBA warranty fees exceed 12 months |
|---|---|---|---|
| Under $1,000,000 | 75% | 0.00% | 0.00% |
| $1,000,001 to $2,000,000 | 75% | 0.25% | 1.45% up to 1.45% and $1 million plus 1.70% of the amounts above $1 million |
| Over $2,000,001 | 75% | 0.25% | Includes 3.50% up to 3.50% and $1 million plus 3.75% of the amounts above $1 million |
| Small 7 (a) Loan amount | SBA Guaranteed | SBA guarantee fees for less than 12 months | SBA warranty fees exceed 12 months |
|---|---|---|---|
| Under $150,000 | 85% | 0.00% | 0.00% |
| $150,001 to $500,000 | 75% | 0.00% | 0.00% |
There is no guarantee fee for the 504 loan issued in 2024. However, the annual service fee is 0.364% of the outstanding balance on the loan. For 504 debt refinance without an extended program loan, the annual service fee is 0.389%. Additionally, veteran-owned companies may be exempt from the guarantee fees of express loans under the 7(a) Program.
For Export Working Capital Program (EWCP) loans, the advance fees are listed below:
| Loan amount | SBA Guaranteed | Mature | commission |
|---|---|---|---|
| Under $1,000,000 | 90% | n/a | 0.00% |
| Over $1,000,001 | 90% | Under 12 months | 0.25% of guaranteed portion |
| Over $1,000,001 | 90% | 12-24 months | 0.525% of guaranteed portion |
| Over $1,000,001 | 90% | 25-36 months | 0.80% of guaranteed portion |
Are there other fees for SBA loans?
Lenders – or brokerages may be responsible for lending fees in addition to guarantee fees, but the SBA limits how much a financial institution can charge a borrower.
- Packaging fees. The lender or broker may charge a packaging fee if he or she organizes the loan document on your behalf. It may increase your business’s approval chances, but the fee can be thousands of dollars.
- Service charge. The lender may charge a service or service fee for the costs of processing and maintaining the loan. The cost of this varies, but is usually evaluated as a percentage of the total loan amount.
- Late payment fee. The SBA allows lenders to charge a payment fee of 5% of the late payment amount if payments are delayed for more than 10 days.
- Prepaid fee. Prepayment penalties range from 1 to 5% of the prepayment amount. This fee will only be charged within the first three years of the loan if the business pays an outstanding balance of 25% or more.
There may be an additional charge for a 504 loan to cover the service costs of the community development company (CDC) where the business works.
Prohibition fee
There are some fees that the lender cannot charge. According to the SBA, these include:
- Processing fee
- Origination fee
- Application fee
- Brokerage fee
- Commitment fees except for the Export Working Capital Loan Program
Conclusion
When taking out an SBA loan, the guarantee fee is the main cost exceeding interest rates. During fiscal year 2025, small 7(a) loans and all 504 loans have minimal fees and are worth applying. These loans also offer better interest rates and conditions than most financial products.
However, the application and approval process are very competitive. Your business must meet the SBA’s strict eligibility criteria for running out of other business loans and applying them.
