SBA Loan Basics for Borrowers- What is the Guaranty Fee?

What is the SBA guaranty fee?

A lender must pay a fee to SBA for each loan guaranteed under the 7(a) program. This fee is known as the ―SBA Guaranty Fee.

Think of it as like an insurance premium. SBA uses these fees to pay for when they have to honor the guaranty for a lender.

The total loan amount determines the percentage that is used to calculate this fee. The guaranty fee is based on the guaranteed portion of the loan and not the total loan amount.

For Loans of $150,000 or less the guaranty fee is 2% of guaranteed portion

For Loans between $150,001 to $700,000 the guaranty fee is 3% of guaranteed portion

For Loans between $700,001 to $2,000,000 the guaranty fee is 3.5% of guaranteed portion up to $1,000,000 PLUS 3.75% of the guaranteed portion over $1,000,000

For example, the guaranty fee on a $100,000 loan with an 85% guaranty would be 2% of $85,000 or $1,700.

The guaranty fee on a $2,000,000 loan with a 75% guaranty ($1.5 million guaranteed portion) would be 3.5% of $1,000,000 ($35,000) PLUS 3.75% of $500,000 ($18,750), which totals $53,750.

The Recovery Act temporarily waived these guaranty fees, but that expired on May 31, 2010. There is pending legislation to possible extend the waiver of these guaranty fees through the end of the year.