SBA Guaranty Fee Calculator
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SBA Guaranty Fee:
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Total Loan Amount with Fee:
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Additional Monthly Cost:
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Monthly Payment (if fee paid upfront):
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Monthly Payment (if fee financed):
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Note: This calculator provides estimates based on standard SBA fee structures. Actual fees may vary. Please consult with an SBA lender for precise figures.
Understanding SBA Guaranty Fees
What Are SBA Guaranty Fees?
SBA guaranty fees are upfront fees charged by the Small Business Administration to guarantee a portion of your loan. When you get an SBA loan, the SBA doesn't provide the money directly—instead, it guarantees a percentage of your loan to the lender. This guarantee reduces the lender's risk, making them more willing to approve loans for small businesses. The guaranty fee compensates the SBA for this risk.
How Are Guaranty Fees Calculated?
SBA guaranty fees are calculated based on:
- The loan amount
- The percentage of the loan guaranteed by the SBA (typically 75-85%)
- The maturity (term) of the loan
Fee rates typically range from 0.25% to 3.75% of the guaranteed portion, with the highest fees applying to larger loans with longer terms. For loans under $500,000 with terms over 12 months, expect fees around 3.5% of the guaranteed portion.
Why Guaranty Fees Matter
Guaranty fees significantly impact the total cost of your SBA loan in ways many borrowers don't initially consider:
- For a $500,000 loan with a 75% guaranty and a 7-year term, the guaranty fee could be approximately $13,125 (3.5% of the $375,000 guaranteed portion)
- This fee is in addition to your interest costs and can significantly increase your effective borrowing rate
- The fee must either be paid upfront or financed as part of the loan, increasing your principal and monthly payments
Planning for Guaranty Fees
To effectively plan for SBA guaranty fees, consider these strategies:
- Pay upfront if possible: If you have the capital, paying the fee upfront rather than financing it can save you money over the long term by avoiding interest on the fee amount
- Structure your loan strategically: Consider whether a shorter loan term might qualify for a lower fee rate
- Borrow only what you need: Guaranty fees increase with loan amount, so borrow only what your business truly requires
- Compare total costs: When comparing SBA loans with other financing options, factor in guaranty fees for an accurate comparison
- Use this calculator: Test different loan scenarios to understand how varying terms and amounts affect your total costs
Recent Changes to SBA Guaranty Fees
The SBA occasionally adjusts its fee structure. In response to economic conditions, the SBA has sometimes temporarily reduced or waived guaranty fees on certain loans. It's always worth checking the current fee structure with your lender to see if any temporary reductions are in effect.
Common FAQs About SBA Guaranty Fees
Can guaranty fees be waived?
Occasionally, the SBA implements temporary fee waivers during economic downturns or for specific types of borrowers. Veterans may qualify for reduced fees under certain programs. Ask your lender about current fee waiver programs.
Are guaranty fees tax-deductible?
SBA loan guaranty fees are typically considered loan costs that must be amortized over the life of the loan rather than deducted in a single year. Consult your tax professional for guidance specific to your situation.
Can I negotiate guaranty fees?
Unlike some loan costs, SBA guaranty fees are set by the government and cannot be negotiated. However, you may be able to negotiate other aspects of your loan like interest rates or terms with your lender.
When do I pay the guaranty fee?
The guaranty fee is typically paid at loan closing. You can either pay it out-of-pocket at that time or finance it as part of your loan. If financed, it becomes part of your principal balance and accrues interest over the life of the loan.