SBA Fees

Another reason business owners will shy away from SBA loans are the fees associated. Banks are typically sensitive to the fee concern and will charge a packaging fee ranging from $500-$2,500. This is the only fee the bank will earn on your loan request. The SBA guarantee fee is a pass through fee that is paid to the SBA for the promise to guarantee the loan. The bank doesn’t get to keep any part of that fee.

Although the fee can seem significant; most borrowers are able to recover the expense of the fee with the interest rate savings offered through the program. At most it may take a 1.5 years to recover the fee you will spend with the SBA. Although you may not like the fee, it is important to keep the bigger picture in mind. Make sure you analyze the long term benefits before you let the fee kill your interest in the program.

Another side note about the SBA fees. Historically, stimulus money has been granted by the government to waive the guarantee fees. Currently there is not stimulus money available to offset these fees. Some lenders are offering small promotions where they will pay a portion of the fees on your behalf to the SBA. I have only heard of one lender offering this benefit. I have also seen a lender pay the SBA fees on behalf of the business owner. This is very unusual and you shouldn’t expect it to happen.

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