SBA Loan Rate, SBA Loan Fees, SBA Loan Closing Costs 

SBA Loan Fees, SBA Loan Closing Costs 

Most banks/lender charge these fees.  Some will be more or less than what is described below, but these are averages that we see in the market.  Perhaps this will give you a good comparison to what your local bank is suggesting and or help you research your project.

Here's an example of fees and third party costs on a SBA 7a loan (Scroll below to see 504 fees), with a loan amount of $1,000,000, that is tied to commercial real estate:

• $22,500  -  3% SBA guarantee fee. (the percentage ranges based on the size of the loan amount) The guarantee fee is calculate off of the portion of the loan amount which is actually guaranteed by the SBA.  This is normally set at 75% of the total loan amount on a SBA 7a loan (75% x $1,000,000 = $750,000 x 3% = $22,500).  This fee is financed into the loan amount.
• $3,500 Appraisal Report (some areas of the country maybe lower than this, but not by much.  If your buying a business, with no real estate, the appraisal will likely be lower at appr $750.)
• $1,800 Phase One Environmental Report (sometimes a less comprehensive environmental report can be used, such as on an office building, the fee for that is normally $600)
• $1,500 Title (Title cost vary considerably depending on the state and loan amount)
• $2,500 SBA Packaging Fee (This is an optional expense that the bank charges the borrower.  Some banks do not charge this will many do)
• $2,500 Attoney Review Fee (This is another optional fee, that funding sources charge to borrowers) 
• Total Costs of Approximately $34,800 with the Guarantee Fee or Appr $12,300 without it. 

Borrowers that compare these costs to the closing cost on a normal conventional bank loan will notice the additional expenses of the packaging fees and attorney review fees.  These fees are not required, but the vast majority of banks do demand that the borrowers pay them.  Most of these services (the packaging and legal review fees), are hired out to third parties, sometimes they are handled in house.    

Other more typical fees such as title, appraisal and environmental will normally be on the high side with SBA loans as well.  Most banks that do SBA financing, will use the third party vendors with the best credentials and therefore require the highest price.   For example, a typical appraisal for an SBA loan will cost $3,500 – even if the loan request is small at say $500,000. 

 SBA 504 Loan Fees

Here's a break down of the typical fees on a SBA 504 loan.  Note that the fees normally total about 2.2% of the total loan amount.  This is fairly standard across the industry.    Keep in mind there are two loans on a 504.  The first lien position loan is a bank loan.  It goes to 50% loan to value.  The second loan is the CDC loan (this is the SBA loan) it goes from 51% loan to value to 90% and sits in second lien position. 

Most banks charge a 1% origination fee on the first loan.  Some will structure this as 1% on the total loan amount, ie meaning 1% on both the first and second.  SBA/CDC charges 0.50% origination on the first loan.  The SBA/CDC charges 2.65% loan fee on the second loan.  The CDC also normally charges a fee on the temporary bridge loan which is normally .5%..  Other fees include appraisal at $2,000 -$4,000, environmental report from $500 to $2,000, building inspection report $700. Plus title and attorney review fees depending on your state.    

SBA Loan Closing Costs - Why Pay Them? 

Despite the high fees that are associated with SBA loans, they are still very popular – why?   A couple of reasons.  One, SBA loans provide the highest level of leverage in the industry at 90%.   Two, they are viable and are actively CLOSING.  This is a huge point and should not be over looked.  It’s estimated that 80% of conventional lenders have stopped funding loans.  The 20% that are lending are only considering the very best loan requests. 

Three, most of these costs are rolled into the loan, ie the costs can be financed.  Not the appraisal fee, packaging fee and Phase 1 are normally paid for upfront, but most banks will allow these costs to be reimbursed at closing, especially on refinances.     

Four, besides the fees, these loan programs can have really good terms.  Like low rates (currently in the 5%’s/6%'s), no balloon clauses, long amortization periods (normally 25 years on real estate) and the most flexible underwriting standards in the business.   Because of these reasons, many business owners tolerate the fees and go forward with the loan. 

Let us know if you would like to discuss your potential SBA loan and how we might be able to help you.  Note, that we always strive to reduce our clients rates and closing costs by creating a competitive environment between funding sources.  We are experts in this business and represent our customers interests.  Fill out our Pre Approval Form below to get started.

Other SBA Related Topics: Loan Programs

• SBA Business Loans
• SBA 7a Loans
• SBA Lender List
• SBA 504 Loans

Discussion Of SBA Financing:

• SBA Mortgage Financing
• SBA Lenders
• SBA Loan Fees, SBA Loan Rates
• Most Commonly Asked Questions For SBA Loans
• SBA 7a Offers Highest Leverage of Financing For Businesses

News Related To SBA Loans: 

• SBA Loan Updates
• Decline in SBA Lending
• Fees Waived For SBA Loans
• Small Business Loan Book
• Why All the Hype For SBA Loans?
• Answers on Small Business Administration Loans