How SBA 7(a) Fee Schedules Actually Work

How it’s calculated

SBA 7(a) total fee load = guarantee fee + ongoing fee
                        + packaging fee + prepayment penalty

Upfront guarantee fee = tier rate × guaranteed portion
  Guaranteed portion  = loan amount × guarantee %
                        (75% above $150,000; up to 85% ≤ $150,000)

FY2026 guarantee fee tiers (on guaranteed portion):
  ≤ $500,000              0%      (waived FY2026)
  $500,001 – $700,000     0.55%
  $700,001 – $1,000,000   1.05%
  $1,000,001 – $5,000,000 3.5% on first $1M of guaranteed portion
                          + 3.75% on guaranteed portion above $1M

Annual ongoing servicing fee = 0.55% × outstanding guaranteed
                               balance, per year (embedded in rate)

Packaging fee (broker, if used) = $2,500
                          + $500 per $50,000 of loan above $350,000

Prepayment penalty (maturity ≥ 15 yrs, on prepaid principal):
  Year 1   5%
  Year 2   3%
  Year 3   1%
  Year 4+  0%

Worked example — $1,000,000 loan, 25-yr term, 75% guarantee:
  Guaranteed portion = $1,000,000 × 0.75 = $750,000
  Guarantee fee      = 0.035 × $750,000 = $26,250
  Ongoing fee (yr 1) = 0.0055 × $750,000 = $4,125
  Packaging fee      = $2,500 + 13 × $500 = $9,000
  ─────────────────────────────────────────────────
  Lifetime fee load (no early payoff) ≈ $95,250 (~9.5%)

Assumptions: All figures use the FY2026 SBA 7(a) fee schedule (effective October 1, 2025) and SBA SOP 50 10, Version 8, effective June 1, 2025; rates can change with each fiscal-year Information Notice, so verify the current version before you close. The worked example assumes a 75% guarantee, no fee waiver (the loan sits at the $1M boundary), a broker-prepared application, and a 25-year real-estate-component maturity. The guarantee and ongoing fees are calculated on the guaranteed portion, not the total loan amount; the ongoing fee shown is the year-one figure and declines as principal amortizes. The prepayment penalty applies only to loans with an original maturity of 15 years or longer and only to prepaid principal.

The upfront guarantee fee

The upfront guarantee fee is paid by the borrower at closing. The SBA retains it from the loan proceeds. For fiscal year 2026, the fee schedule is published in SBA Information Notice 5000-878182 and codified in SBA SOP 50 10 §5.4 (Guarantee Fee Schedule), Version 8, effective June 1, 2025. Per Information Notice 5000-878182 (effective FY2026, October 1, 2025), current tiers for FY2026:

The trap most borrowers fall into: this fee is calculated on the guaranteed portion of the loan, not the total loan amount. Per SBA SOP 50 10 §6.2, the SBA guarantees 75% of loans above $150,000 and up to 85% on loans ≤$150,000. If you have a $1,000,000 loan at 75% guarantee, the guaranteed portion is $750,000, not $1,000,000.

Worked example: $1,000,000 loan, 75% guarantee, no waiver applies (loan is at the $1M boundary). Guaranteed portion = $750,000. The fee rate for loans in the $1M tier is 3.5% on the first $1,000,000 of the guaranteed portion. Calculation: 0.035 × $750,000 = $26,250 upfront. That comes directly out of the proceeds at closing. If your lender quoted you “3.5% on the loan” they gave you the wrong number; the correct calculation is 3.5% × $750,000, not 3.5% × $1,000,000. The difference is $8,750. Worth knowing before you close.

The annual ongoing servicing fee

Per SBA SOP 50 10 §5.5 (Annual Servicing Fee) and Information Notice 5000-878182, the ongoing fee is 0.55% per year of the outstanding guaranteed balance for FY2026. The lender pays this fee to the SBA quarterly and, in practice, recovers it from the borrower through the spread built into the interest rate. You will not see a separate line item for it on your monthly statement. It is invisible.

On a $1,000,000 loan with 75% guarantee, the ongoing fee starts at 0.55% × $750,000 = $4,125 per year. As you pay down principal, the guaranteed balance shrinks and the annual fee decreases proportionally. Over a 10-year term, total ongoing fees add up somewhere between $25,000 and $30,000 depending on your amortization speed. Over a 25-year term on the same loan, lifetime ongoing fees can exceed $60,000. This is the number that most “total cost of SBA loan” calculators bury or skip entirely.

The packaging fee

The packaging fee is paid to a broker or Business Development Company (BDC) who prepares and submits your loan application. It does not go to the SBA. Per SBA SOP 50 10 §7.8 (Broker or Loan Packager Fees), the cap is $2,500 plus $500 for each $50,000 of loan amount above $350,000. On a $1,000,000 loan: $2,500 + (($1,000,000 − $350,000) ÷ $50,000) × $500 = $2,500 + 13 × $500 = $9,000.

Not every 7(a) loan involves a broker. If you apply directly through a Preferred Lender Program (PLP) bank or a large community development financial institution, you pay no packaging fee. Many borrowers who work with SBA loan brokers pay the cap without questioning it. If you have a clean application package and a relationship with a PLP lender, skip the broker. Packaging fees roll into closing costs and are sometimes financed into the loan amount, which means you are paying interest on them for the life of the loan.

The prepayment penalty

Per SBA SOP 50 10 §5.6.3 (Prepayment Penalties), the penalty applies only to loans with an original maturity of 15 years or longer. Shorter-term working capital and equipment loans are not subject to it. For those long-maturity loans (most often real-estate-component 7(a)s), the penalty schedule is:

• Year 1: 5% of prepaid principal
• Year 2: 3%
• Year 3: 1%
• After year 3: zero

The penalty is on the prepaid principal, not the entire outstanding balance. If you have a $900,000 balance and make a $100,000 lump-sum principal payment in year 1, the penalty applies to the $100,000 you prepaid, not the $900,000 remaining. Partial prepayments trigger a pro-rata penalty. Most online calculators either ignore this fee entirely or misapply it to the full balance. On a $750,000 prepayment in year 1, the difference between those two calculations is $37,500 versus the correct answer of 5% × the actual prepaid amount.

If you intend to refinance the property or sell within three years, model this fee before you close. On a $1,000,000 loan paid off entirely in year 1, you are writing a $50,000 check to the lender on top of any closing costs for the new loan.

The real total cost on a $1M loan

Take a $1,000,000 SBA 7(a) loan, 25-year term (real estate component), 75% guarantee, no waiver applicable, application prepared by a broker:

That is roughly 9.5% of the original $1,000,000 loan in fees alone, before a single dollar of interest. With an early payoff in year 1, the total climbs above $135,000, or 13.5% of the loan amount. Compare that to the headline number you see on most lender websites: “3.5% guarantee fee” (which is actually 3.5% of the guaranteed portion, not the total loan). The headline is $26,250. The true lifetime cost is $95,000 to $135,000 depending on your payoff scenario. The gap is almost entirely the ongoing servicing fee, which is invisible on your statement and missing from most calculators.

One important offset: for loans at or below $500,000, the FY2026 guarantee fee waiver drops the upfront cost to zero. If you can structure your loan need under $500,000, the upfront hit is eliminated. The ongoing fee still applies.

Model the full fee load before you close

The SBA 7(a) program is one of the most consequential sources of small business capital in the United States, and the fee structure is one of the most consistently misunderstood parts of the deal. Bob Coleman — founder of the Coleman Report, the nationally recognized SBA lending market authority read by lenders, brokers, and regulators — tracks 7(a) program volume, approval rates, and lender participation as the primary private-sector data surface for SBA activity. Coleman's market-data lens reinforces the practical point: at scale, the gap between headline fee disclosures and actual lifetime fee cost across thousands of deals is material. Understanding that gap at the individual borrower level is what this article is designed to close.

In my experience working alongside small business operators on financing decisions, the upfront guarantee fee gets all the attention at closing while the ongoing servicing fee quietly does the real damage. I’ve seen borrowers who negotiated hard on the headline rate but never asked what the 0.55% annual ongoing fee adds up to over a 25-year term — and on a $1,000,000 loan that is the difference between a $26,250 fee they planned for and a fee load north of $90,000 they did not. The single most useful question I tell operators to ask their lender is simply: “What is my guaranteed portion, and what does the ongoing fee cost me each year on it?” That one question surfaces the invisible number before it surprises them at payoff.

The SBA publishes its current fee schedule on its website and updates it with each fiscal year Notice. Rates can change annually. Before you close on any 7(a) loan, pull the current version of SBA SOP 50 10 and the most recent fee Information Notice (currently 5000-878182), linked from the SBA 7(a) lender program page. Verify the current year's rates and run the numbers on all four components. Lenders are required to disclose fees, but the ongoing servicing fee typically appears as part of the rate spread rather than a standalone disclosure, which is why it catches borrowers off guard at payoff.

Use the SBA 7(a) calculator on this site to model the full four-component fee load on your specific loan amount, term, guarantee percentage, and prepayment scenario. Enter your actual numbers and see the lifetime cost, not just the closing day figure.