The Small Business Administration (SBA) has announced an important change to its fee structure for 7(a) loans. Starting March 27, 2025, the SBA will reinstate the Guaranty (Upfront) Fee on 7(a) loan applications. This change will impact small business owners seeking SBA-backed financing and will remain in effect through September 30, 2025.
Why is the SBA reinstating this fee?
The SBA funds itself through borrower fees to keep the 7(a) Loan Program at zero cost to taxpayers. The Guaranty Fee was a standard part of SBA loans before 2020, but it was temporarily suspended. Now, the SBA is reinstating the fee to sustain the program and ensure continued access to affordable financing for small businesses. Without these fees, the SBA risks financial losses that could impact the long-term availability of the 7(a) Loan Program.
What does this mean for small business owners?
If you’re applying for an SBA 7(a) loan, you will now be responsible for a Guaranty Fee, which is netted out of your loan proceeds at the time of funding. This is not a good faith deposit or escrow payment, but rather a required fee deducted from your loan amount, calculated based on your loan size:
- For loans of $150,000 or less: 1.7% of the Loan Balance
- For loans of $150,001 to $500,000: 2.25% of the Loan Balance
How to calculate the Upfront Guaranty Fee
Here’s a breakdown of the guarantee fee based on common loan amounts:
|
Requested Loan Balance |
Guarantee Fee (% of loan amount) |
Guarantee Fee ($) |
|
$100,000 |
1.7% |
$1,700 |
|
$250,000 |
2.25% |
$5,625 |
|
$500,000 |
2.25% |
$11,250 |
Important Note: The Guaranty Fee can be collected from loan proceeds, meaning borrowers do not need to make an upfront payment or good faith deposit.
Who is affected?
- New loan applicants: Any 7(a) loan approved by the SBA on or after March 27, 2025, will be subject to these fees.
- Existing loans: Loans approved by the SBA before 11:59 PM (ET) on March 26, 2025, will not be impacted.
Additional resources
For more details on the SBA’s 7(a) Loan Program and fee structure, visit the following resources:
- SBA Information Notice - (download document)
- SBA 7(a) Loan Program Overview
- NAGGL Announcement on Fee Revisions
- SBA Lenders - Revised Loan Fees for FY 2025
Questions? We’re here to help!
If you have questions about how these changes impact your loan application, please contact your account manager or email support@smartbizbank.com. Our team at SmartBiz is here to help you navigate these updates and secure the funding your business needs.
