What the fee pays for
The fee compensates the SBA for guaranteeing part of the loan, which lowers the lender's risk and makes longer terms and easier approvals possible.
When a lender makes an SBA loan, the SBA agrees to cover a share of the loss if the borrower defaults. The guarantee fee is part of how the program funds that backstop.
It applies to the guaranteed portion of the loan, not the whole balance. A loan with a larger guaranteed share can therefore carry a larger fee than the same loan at a smaller share.
How the amount is figured
The SBA publishes a tiered fee schedule by loan size and maturity. Percentages are applied to the guaranteed amount, and the schedule can be adjusted or waived for some periods.
Smaller loans tend to carry a lower percentage, and larger loans carry a higher one on the portion above set thresholds. Loans with short maturities often have a lower fee than long ones.
The exact tiers and any temporary waivers change over time, so I will not quote percentages here. Check the current schedule on SBA.gov or ask your lender for a written fee breakdown. Our article on tracking SBA changes explains where to look.
Who pays and when
The lender pays the SBA, then typically charges the borrower. It can be paid at closing or added to the loan amount.
If the fee is financed, it increases your loan balance and you pay interest on it. If you pay it at closing, you need cash at that point. Neither is better in every case. Financing preserves cash. Paying upfront saves interest.
Ask your lender which options are available and how each changes your total repayment. Also ask for any other closing costs, such as packaging, legal or appraisal fees.
A rough way to estimate cost
Multiply the guaranteed portion by the fee percentage to get the fee. Add it to interest and other fees to see total cost.
Here is a purely illustrative example, with a made-up percentage to show the arithmetic. If a $200,000 loan has an 80 percent guaranteed portion, that is $160,000. If the fee were 2 percent, the charge would be $3,200. Financed, that is added to the balance.
| Item | Amount |
|---|---|
| Loan amount | $200,000 |
| Guaranteed portion | $160,000 |
| Example fee at 2% | $3,200 |
Replace the example percentage with the lender's actual figure.
Other SBA costs to compare
Besides the guarantee fee, expect interest, possible annual servicing fees, closing costs and sometimes prepayment fees on longer loans.
Compare offers on total repayment, not only the rate. See SBA loan interest rates for how rates are built. If you are weighing programs, the comparison of microloans and 7(a) loans shows how costs and sizes differ.
Ask whether there is a prepayment penalty and whether any fee is refundable if you pay early.
Is the SBA route still cheaper?
Often yes on total cost, but slower. If timing has a real dollar value, compare it against faster products.
The SBA's lower rates and longer terms usually beat fast financing on cost. But a few weeks of delay can cost more than the savings if the project is earning. Weigh both.
ROI Funder places SBA loans and faster options such as term loans in 1-5 days. We show true cost, payback period and monthly-equivalent payment so you can compare. We consider 500+ FICO, 6+ months in business and $20,000+ monthly revenue. Apply with a soft credit pull.
Frequently asked questions
Who pays the SBA guarantee fee?
The lender pays the SBA and usually passes the cost to the borrower, at closing or financed into the loan.
Is the fee charged on the whole loan?
It is based on the guaranteed portion of the loan, not the full balance.
Does the fee change?
Yes. The schedule is adjusted and sometimes waived. Check SBA.gov or ask your lender for the current fee.
Can I finance the fee?
Often yes, which raises the loan balance and the interest you pay. Ask your lender.