SBA Fee Structures Explained

I think one of the most common places originators lose credibility is when a borrower asks "how much is this going to cost me?" and the originator can't give a clear answer. SBA fee structures aren't complicated once you learn them, but they're layered — the SBA guarantee fee, lender closing costs, packaging fees, and your own compensation. If you can't explain each piece and how they fit together, the borrower fills that gap with suspicion.

The good news: the SBA regulates most of the fee structure. There are caps, formulas, and rules that keep things predictable. Here's the overview every originator needs.

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The SBA Guarantee Fee

The SBA charges a guarantee fee on every 7(a) loan with maturity over 12 months. It's calculated on the guaranteed portion (not the full loan), and it scales with loan size:

• $150,000 or less: 2.0%
• $150,001 – $700,000: 3.0%
• $700,001 – $1,000,000: 3.5%
• $1,000,001 – $5,000,000: 3.75% (plus 0.25% on the portion above $1M)

There's also a 0.55% annual servicing fee, usually built into the lender's costs. The guarantee fee is typically rolled into the loan so borrowers don't pay it out of pocket at closing.

These rates change periodically — the SBA has waived or reduced fees in certain fiscal years. Always verify against the current SBA notice. For the full 7(a) program breakdown including rate structures, see our Complete Guide to SBA 7(a) Loans.

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Other Costs to Know

Beyond the guarantee fee, borrowers pay closing costs that mirror conventional commercial lending:

• Packaging fees: $2,500–$7,500+ depending on lender and complexity
• Appraisals: $2,500–$5,000 (real estate); $3,000–$10,000 (business valuations)
• Environmental review: $2,000–$4,000 for deals involving real estate
• Legal fees, title, UCC filings: Variable by deal

All-in, total closing costs typically run 2% to 5% of the loan amount. On smaller deals the percentage skews higher because many costs are fixed regardless of size.

The best practice: give borrowers a realistic range early. Not an exact number, but a range that prepares them. Nothing erodes trust faster than a borrower who budgeted $5,000 and gets hit with $15,000 at closing.

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How Originators Get Paid

The standard model: the lender pays you a referral fee at closing, from their revenue on the transaction. Borrower-paid broker fees are also permitted under SBA rules, but they must be reasonable, fully disclosed to the lender, and documented in a written fee agreement — see our SBA referral fee structures guide for the full breakdown.

Typical referral fees range from 0.5% to 1.5% depending on loan size, lender, deal complexity, and your relationship volume. On a $1M deal at 1%, that's $10,000. On a $3M deal at 1.25%, that's $37,500.

Key mechanics: fees are paid at closing only, written referral agreements are essential, and all compensation must be disclosed to the borrower. For more on structuring your compensation, see our SBA referral fee structures guide.

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The Complete Picture

Knowing the fee structure conceptually is step one. Knowing how to negotiate lender fee splits, structure your compensation for high-volume relationships, navigate disclosure compliance, and explain the full cost picture to borrowers in a way that builds trust — that's what separates productive originators from everyone else.

Module 3 of our originator training at learn.lordsoflending.com covers lender fee negotiation strategies, referral agreement templates, fee disclosure compliance frameworks, and advanced compensation structures. It's the system behind knowing your numbers cold.

Start your training at learn.lordsoflending.com →

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Frequently Asked Questions

Who pays the originator's referral fee — the borrower or the lender?

The lender pays from their revenue on the transaction. Borrowers should not be charged a separate broker fee. All fees must be disclosed on closing documents.

Can the SBA guarantee fee be waived?

In certain fiscal years, the SBA has waived or reduced guarantee fees as part of stimulus programs. Check the current SBA notice for the fiscal year you're originating in.

Are SBA loan fees tax deductible?

Generally yes — the guarantee fee and loan-related costs are typically deductible as business expenses, though the deduction may need to be amortized. Borrowers should consult their tax advisor.

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Veterans get real advantages on SBA fees — including periods where the guarantee fee has been eliminated entirely. Read our guide on SBA loans for veterans before your next deal with a veteran borrower.

For how fees fit into the full deal economics — from LOI to closing — our deal structuring guide puts the numbers in the context of a real transaction.

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This content is for educational purposes only and does not constitute legal, financial, or investment advice. Consult with a qualified attorney, CPA, and financial advisor before making business or financing decisions. Loan terms, rates, and programs are subject to change and vary by lender.