SBA 7a Loans – SBA Guaranty Fee 

An exhaustively researched guide to SBA 7a loans.


Calculating your SBA 7a Guaranty Fee

According to SBA Standard Operating Procedures (SOP 50 10 5 (J) – updated in January 2018 –  “a Lender must pay a fee to SBA for each loan guaranteed under the 7(a) program. This fee is known as the ‘SBA Guaranty Fee.’ The total loan amount determines the percentage that is used to calculate this fee and the guaranty fee is based on the guaranteed portion of the loan and not the total loan amount.”

Speritas Capital note: The borrower pays the fee, customarily out of loan proceeds, and the Lender forwards the amount owed to the SBA within 90 days of closing.

For the purposes of this white paper, we’ll be discussing the fees on SBA loans with maturities over 12 months.

Big Changes in October 2018

Previously, SBA guaranty fees were waived on SBA 7a loans under $150K.  Starting October 1, 2018 waivers of this guaranty fee on SBA 7a loans were terminated except for qualifying veterans and their spouses and for rural/HUBZone businesses.

Some of the recent changes to SBA lending and guaranty portions are genuinely confusing, not just to borrowers but to those in the industry as well.  Rather than trying to detail out each possible situation, we suggest asking your Preferred Lender or Speritas Capital to accurately calculate your SBA guaranty fee for you.  For further reading we suggest:

Congressional Research Service Report to Congress – June, 2018

Government Accountability Office Report to Congressional Committees – June 2018


Gross Loan Size
Under $150K

Term: Over 12 months
Guaranteed Portion: 85%
Guarantee Fee: 2% (of Guaranteed Portion)
*Lender is authorized to retain 25% of the fee.


Gross Loan Size
$150K+ to $700K

Term: Over 12 months
Guaranteed Portion: 75%
Guaranty Fee: 3% (of Guaranteed Portion)


Gross Loan Size
$700K+ to $5MM

Term: Over 12 months
Guaranteed Portion: 75%
Guaranty Fee: 3.5% of guaranteed portion up to $1,000,000 PLUS 3.75% of the guaranteed portion over $1,000,000


Note 1: The SBA specifies the amount of certain fees each fiscal year for all loans approved during that year.

Note 2: For example, the guaranty fee on a $100,000 loan with an 85% guaranty would be 2% of $85,000 or $1,700, of which the lender may retain $425. (A type-o in the SOP states that this loan example is for 1MM).

Note 3: For example, the guaranty fee on a $5,000,000 loan with a 75% guaranty (3.75 million guaranteed portion) would be 3.5% of $1,000,000 ($35,000) plus 3.75% of $2,750,000 ($103,125) with totals $138,125.

EXCEPTIONS

Veterans and Spouses

The Guaranty fee is ZERO on SBA Express loans to qualified Veterans & Spouses up to $350,000.

Rural Area / HUBZone

Loans of $150,000 or less made to a small business located in a rural area or a HUBZone will have guaranty rates of 0% to 0.67%.


View our list of SBA White Paper Sources.


 

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