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Some Good News for Borrowers on SBA Guaranty Fees

Whether you are a business seller or a business buyer, the access to capital and the cost of money is very important. 

As interest rates continue to rise and prices on just about everything are going up, the SBA (Small Business Administration) has some good news for borrowers… 

When obtaining guaranteed SBA 7(a) loans, one of the primary fees borrowers and lenders deal with is the SBA Guaranty (also spelled Guarantee) Fee, which is generally paid for by borrowers and also may be financed with the proceeds of the loan. 

Keep in mind, SBA does not loan money directly to borrowers. SBA guarantees a percentage of the loan amount provided by the lender and charges a Guaranty Fee for the risk involved. The Guaranty Fee is a percentage of the guaranteed portion of your loan, which varies depending on the loan type. For loan amounts above $150,000, SBA guarantees 75% of the loan amount. For loan amounts under $150,000, SBA guarantees 85% of the loan amount. 

Effective for applications submitted on or after October 1, 2022, the SBA has eliminated the Guaranty Fee for loans under $500,000 and reduced the fee for loans between $500,001 and $1 million. 

To demonstrate, here are a couple of examples: Previously, if a $500,000 75% Guaranteed SBA 7(a) loan was made, the borrower had to pay 2.77% of the guaranteed portion…that’s $10,387.50 for the SBA Guaranty Fee. That fee is now $0! 

On a $1 million loan, the fee would have been 3.27% of 75% of the loan amount, or $24,525. That fee is now only $7,875! 

Here’s a breakdown on loan sizes and associated guaranty fees: 

Loan SizePrevious FeeFee as of October 1, 2022
Up to $500,000 0% of guaranteed portion
$500,001-$700,0002.77% of guaranteed portion.55% of guaranteed portion
$700,001-$1 million3.27% of guaranteed portion1.05% of guaranteed portion

For those loans over $1 million, the fee is unchanged; 3.5% of the guaranteed portion up to $1 million, plus 3.75% of the guaranteed portion over $1 million. 

If you or a business you know is in need of financing, now is the time to act in order to save on fees! 

The Loans4Biz program saves participants time and money by offering the following benefits for anyone needing assistance with small business financing: 

– Assistance with gathering and completion of documents required by most lenders 

– Initial communication with all lenders managed by the Loans4Biz program manager 

– Much better chance of finding a lender who is interested in providing a loan 

– A number of financing options presented for consideration 

– Thousands of dollars of interest saved over the full term of the loan 

– The option of closing quicker when that is a preference 

To learn more about the Loans4Biz program, contact Kelly Tivis @ 479-770-8989 or