Updated October 2026 · Uses SBA FY2027 fee schedules (effective Oct 1, 2026 – Sep 30, 2027)
Why this exists: when a lender quotes you 9.75%, that number does not include the SBA guarantee fee or their own fees. On a $500,000 loan the gap works out to roughly 0.77 percentage points — and it lasts as long as the loan. Enter your quote below to see the real number.
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What the guarantee fee actually costs
The SBA guarantee fee is the one number that surprises borrowers, because it is calculated on the guaranteed portion of the loan, not the full amount — but lenders usually finance it into the loan, so you also pay interest on it.
The fee is not a flat percentage — it steps up at $150,000 and again at $700,000, and the amount above $1 million is charged at a higher rate. On a $5 million loan the fee exceeds $138,000.
The FY2027 fee schedule
| Gross loan amount | Guarantee | Upfront fee (term > 12 months) |
|---|---|---|
| $150,000 or less | 85% | 2% of the guaranteed portion |
| $150,001 – $700,000 | 75% | 3% of the guaranteed portion |
| $700,001 – $5,000,000 | 75% (capped at $3.75M) | 3.5% up to $1M guaranteed, plus 3.75% above that |
| Any amount, term ≤ 12 months | — | 0.25% of the guaranteed portion |
| Qualifying manufacturer / food supply chain / rural, ≤ $700,000 | — | 0% (waived in FY2027) |
| SBA Express, veteran-owned business | 50% | 0% |
Source: SBA Information Notices 5000-881797 and 5000-881796, effective October 1, 2026. Fees are set annually — confirm before relying on any figure.
Two details that trip people up: the fee tier is chosen by the gross loan amount (guaranteed plus unguaranteed), while the fee is charged on the guaranteed portion only. A $2 million loan is not charged 3.5% of $2 million. And if you take two 7(a) loans within 90 days, SBA treats them as one — splitting a loan to reduce fees is not permitted.
Common questions
What is the SBA guarantee fee?
A one-time fee the SBA charges lenders to cover its cost if a borrower defaults, which lenders almost always pass on. For FY2027 on loans with a maturity over 12 months: 2% of the guaranteed portion at $150,000 or less, 3% from $150,001 to $700,000, and 3.5% up to $1M plus 3.75% above that for larger loans.
How is the guarantee fee calculated?
Two steps people get wrong. The tier is chosen by the gross loan amount — guaranteed plus unguaranteed combined. The fee is then calculated on the guaranteed portion only: 85% up to $150,000, 75% above that, capped at $3,750,000. A $2M loan is charged 3.5% of $1,500,000, not of $2 million.
Why is True APR higher than my quoted rate?
Because the quote excludes the guarantee fee and lender fees. The guarantee fee is usually financed into the loan, so you pay interest on it for the entire term. On a $500,000 loan at 9.75% over 10 years, about $11,250 of guarantee fee plus 1% lender fees moves the effective cost to roughly 10.52%.
Do all SBA loans have the same fee?
No. In FY2027, loans of $700,000 or less to manufacturers (NAICS 31-33), certain food supply-chain businesses, and rural businesses pay 0%. SBA Express loans to veteran-owned businesses also pay 0%. Loans of 12 months or less pay 0.25% regardless of size.
Is the guarantee fee negotiable?
No. The SBA sets it and announces it annually, so two lenders quoting the same loan must show the same fee. What you can negotiate is the lender's own packaging and closing fees — typically $1,500 to $5,000 on smaller loans.
Can I avoid the fee?
Only through a waiver. SBA determines rural status through E-Tran using your project address and Census data, so your ZIP code effectively decides eligibility for the rural waiver.
What is the annual service fee?
0.55% of the outstanding guaranteed balance, paid annually by the lender. Unlike the upfront fee, lenders may not pass it to you, so it never appears on your closing statement.
Is there a prepayment penalty?
Only on loans of 15 years or more. Prepaying more than 25% in the first three years costs 5% in year one, 3% in year two, 1% in year three. Most working capital, equipment and acquisition loans are 10 years or less and carry no penalty.
What if I take two SBA loans within 90 days?
SBA treats them as one loan for the guarantee percentage and upfront fee, even across different lenders. The second fee is calculated as if both were approved together, minus what was already paid. Splitting a loan to cut fees is explicitly not allowed.
How much is the fee on a $500,000 loan?
On a 10-year loan the guaranteed portion is $375,000 at 75%, and the 3% tier applies, giving $11,250. With a typical 1% origination fee, total upfront cost lands around 3% to 4% of the loan.
Not sure how much you should request? Work out your DSCR limit first, then run the eligibility checker — it takes about 60 seconds and does not affect your credit.
Last reviewed October 2026. SBA fee schedules change every fiscal year — verify with your lender or the current Information Notice before relying on these figures.
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