Once the Loan Approval/Commitment Letter is signed, the next step in the SBA 7(a) loan process is the borrower’s payment of required deposits. These payments, listed in the letter, cover the SBA packaging fee and the cost of third-party reports.
The exact amount the borrower has to pay can differ depending on which third-party reports are required, but it’s usually somewhere between $3,000-$17,500.
Typically, this step’s cost is added to the loan amount and any excess deposits/fees are credited back to the borrower when the loan closes. In other words, the borrower gets the money spent on this step back at the conclusion of the loan process.
Before this step, the loan is transferred to the lender’s closing department. As such, the borrower’s primary point of contact at the lender changes to their assigned loan closer for this step and the remainder of the loan process.
Common Deposits
The exact deposits the lender requires depend on the lender and loan. However, here are the costs the borrower usually has to pay:
• SBA Packaging Fee Deposit ($2500)
The SBA packaging fee is an administrative fee the SBA charges the lender, the cost of which the lender then passes on to the borrower. This is the only administrative fee the lender charges the borrower. This is notably only a deposit, and if the loan doesn’t go through for whatever reason the borrower will get the money back.
• Third Party Report Costs ($500-$15,000)
The costs of real estate appraisals ($4,000-$8,000, but typically ~$5,000. This includes appraisals that also include a business valuation), business valuations ($500-$3,000), environmental assessments ($2000-$2500 for phase I, $3,000-$4,500+ for phase II), and any other third party reports the lender requires.
Loan Fees Not Paid Now
• SBA Guarantee Fee (0%-3.75% of Loan Amount)
The SBA charges borrowers a guarantee fee, which is a small percent of the loan’s guarantee value. A loan’s guarantee value is usually 75% of the loan’s total value, as the SBA guarantees 75% of the value of most loans.
There is notably not a guarantee fee deposit to be paid now, with the cost instead simply added onto the cost of the loan and paid at loan closing.
For loans of <$150,000, the guarantee fee is 2% of the guarantee value.
For loans of $150,001-$700,000, the guarantee fee is 3% of the guarantee value.
For loans of >$700,000, the guarantee fee is 3.5% of the first $1,000,000 in guarantee value, then 3.75% of the guarantee value over $1,000,000 (if applicable).
The SBA has a 7(a) loan guarantee fee calculator for borrowers, which can be found here.
