The SBA guarantee fee is a one-time upfront charge on an SBA 7(a) loan. It is calculated on the guaranteed portion of the loan, not on the full amount, and under the most recent published schedule (fiscal year 2026) it runs from 0.25% on short-term loans to 3.75% on the largest ones. The SBA bills the lender, and the lender is allowed to pass that cost to you. Below, we walk through who pays, how the math works with real dollar examples, which borrowers pay nothing, and how to plan for the fee before you sign.
TL;DR
- The guarantee fee is charged to the lender by the SBA, and lenders may pass the cost on to the borrower. Expect it on your closing statement.
- For loans with maturities over 12 months, the FY 2026 fee is 2% to 3.75% of the guaranteed portion. Short-term loans of 12 months or less pay 0.25%.
- The fee applies to the guaranteed share of the loan, not the full balance, which is why the percentage looks high but the dollar cost is lower than many owners expect.
- Some borrowers pay 0%, including qualifying small manufacturers on loans of $950,000 or less.
- The annual service fee is separate and cannot be charged to you.
Table of Contents
- What the SBA guarantee fee is
- Who pays the guarantee fee
- FY 2026 guarantee fee schedule
- How the fee is calculated
- Fee waivers and exceptions
- The annual service fee: a separate charge you don't pay
- Other costs to expect on an SBA loan
- How to plan for the fee
- Is the fee worth paying?
- Our perspective
- Explore SBA financing with Capital for Business
- FAQ
- Sources
What the SBA guarantee fee is
An SBA 7(a) loan is made by a private lender, but the SBA promises to repay part of it if the borrower defaults. That promise is what lets lenders approve businesses that a conventional underwriting model would decline. The SBA covers the cost of the program partly through fees, and the guarantee fee (the SBA also calls it the upfront fee) is the main one at the start of the loan.
The SBA describes the 7(a) program as a loan guarantee to lenders that helps small businesses with special financing requirements. The fee is the price of that guarantee. It is not interest, it is not a lender origination fee, and it is not negotiable by the lender, because the SBA sets it each fiscal year.
A fiscal year runs from October 1 to September 30, and the SBA issues a new fee notice for each one. That matters because the numbers in this article are the FY 2026 schedule, published in SBA Information Notice 5000-872051, titled 7(a) Fees Effective October 1, 2025 for Fiscal Year 2026. Because a new fiscal year began on October 1, 2026, confirm the current figures on the SBA's site or with your lender before you budget. The structure (tiers by loan size, a lower rate for short terms, a separate annual fee) has been stable, but the exact percentages are set by notice.
Who pays the guarantee fee
Legally, the lender pays. The SBA states that lenders must pay an upfront fee for each loan it guarantees and are permitted to pass the cost to the borrower. In practice, most borrowers see the fee as a line item at closing or folded into the cost of the transaction.
The timing rules are set in federal regulation, and they affect when you can be charged:
- Loans with maturities over 12 months: the lender must pay the fee to the SBA electronically within 90 days of loan approval, and under 13 CFR 120.220 the lender may charge you after the first disbursement.
- Short-term loans of 12 months or less: the lender must pay within 10 business days of approval, and may charge you only after the fee has been paid to the SBA.
If a lender never pays, the SBA can terminate the guaranty, which is why lenders treat this fee as part of the closing checklist rather than an afterthought. For you, the practical takeaway is simple: you should not be asked to pay the SBA fee in cash before the loan is approved and funded under the rule that applies to your loan.
FY 2026 guarantee fee schedule
The fee depends on the loan amount and the maturity. The table below uses the schedule in the SBA information notice for fiscal year 2026.
| Loan type | Loan amount | Upfront guarantee fee |
|---|---|---|
| Maturity over 12 months | $150,000 or less | 2% of the guaranteed portion |
| Maturity over 12 months | $150,001 to $700,000 | 3% of the guaranteed portion |
| Maturity over 12 months | $700,001 to $5,000,000 | 3.5% of the guaranteed portion up to and including $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000 |
| Maturity of 12 months or less | Any size | 0.25% of the guaranteed portion |
The top of the range matches the 7(a) program cap: the maximum 7(a) loan is $5,000,000.
Two details trip up borrowers reading this table:
- The tiers are keyed to the loan amount, but the percentage is applied to the guaranteed portion. A $500,000 loan falls in the 3% tier, and the 3% is multiplied by the guaranteed dollars, not by $500,000.
- The $1,000,000 breakpoint in the top tier is also measured on the guaranteed portion. A $1,200,000 loan with a 75% guarantee has a guaranteed portion of $900,000, so it never reaches the 3.75% rate.
How the fee is calculated
The formula has three steps.
- Find the guaranteed portion: loan amount multiplied by the SBA guarantee percentage.
- Find the fee rate for your loan amount and maturity from the table above.
- Multiply the guaranteed portion by the rate. If the loan reaches the top tier, split the guaranteed portion at $1,000,000 and apply 3.5% and 3.75% to the two pieces.
The guarantee percentage is the piece owners most often get wrong, so it is worth a closer look. The SBA does not guarantee 100% of a 7(a) loan. Larger loans carry a 75% guarantee, and smaller loans of $150,000 or less generally carry a higher share, commonly 85%. The lender carries the unguaranteed remainder, which is one reason it still evaluates your cash flow, credit and collateral.
Worked examples
The examples below use the FY 2026 rates. Guarantee percentages are assumptions stated in each line, so confirm the actual guarantee on your loan with your lender.
| Loan | Guarantee assumed | Guaranteed portion | Calculation | Fee |
|---|---|---|---|---|
| $100,000, 10-year term | 85% | $85,000 | 2% of $85,000 | $1,700 |
| $500,000, 10-year term | 75% | $375,000 | 3% of $375,000 | $11,250 |
| $1,200,000, 10-year term | 75% | $900,000 | 3.5% of $900,000 | $31,500 |
| $2,000,000, 10-year term | 75% | $1,500,000 | 3.5% of $1,000,000 plus 3.75% of $500,000 | $53,750 |
| $5,000,000, 10-year term | 75% | $3,750,000 | 3.5% of $1,000,000 plus 3.75% of $2,750,000 | $138,125 |
| $200,000 short-term line, 12 months | 75% | $150,000 | 0.25% of $150,000 | $375 |
A few observations from these numbers:
- On a typical small business loan between $100,000 and $500,000, the fee lands between about 1.7% and 2.3% of the total loan amount once the guarantee percentage is applied. It is a real cost, but it is spread across a long repayment term.
- The fee jumps at $150,000 and again at $700,000. A loan of $150,000 with an 85% guarantee costs $2,550 in fee at 2%. A loan of $150,001 moves into the 3% tier, and with a 75% guarantee the fee becomes $3,375. Owners sometimes size a request just under a threshold, but never shrink a project so far that it can't be completed to save a few hundred dollars.
- Short-term loans are far cheaper at the front end, but they come with their own repayment pressure, since the full balance is due within a year.
The SBA also publishes an official 7(a) Loan Guaranty Fee Calculator for FY 2026 that takes into account the loan type and recent loans to the same borrower. Use it to check any quote a lender gives you.
The 90-day rule on multiple loans
If you receive more than one 7(a) loan within a short period, the SBA may combine them when calculating the fee. Loans approved within 90 days are combined for purposes of the guaranty and upfront fees, with a separate exception that applies when working capital pilot (WCP or EWCP) loans are involved. Combining loans can push the total into a higher tier. If you plan to borrow for equipment and for working capital in the same quarter, ask your lender how the 90-day rule applies before structuring the requests.
Fee waivers and exceptions
The SBA does not charge the same fee to every borrower. The FY 2026 notice lists exceptions, and two matter to many of the trades we work with:
- Small manufacturers. For loans to manufacturers in NAICS sectors 31 to 33 of $950,000 or less, the upfront fee is 0%. This does not apply to MARC loans. The SBA also announced the waiver for small manufacturers in a September 2025 release. If you run a machine shop, a fabrication business or a food or furniture producer, check whether your NAICS code falls in sectors 31 to 33.
- Veteran-owned businesses. SBA Express loans to businesses owned and controlled by a veteran or a veteran's spouse carry a $0 upfront fee.
Waivers are tied to a fiscal year, and Congress and the SBA can change them. If you qualify today, ask your lender to confirm the waiver is in the notice that covers your approval date.
The annual service fee: a separate charge you don't pay
The guarantee fee is often confused with the annual service fee, which is also called the ongoing guaranty fee. They are different charges with different payers.
| Upfront guarantee fee | Annual service fee | |
|---|---|---|
| When | Once, after approval | Every year the loan is outstanding |
| Based on | Guaranteed portion at approval | Guaranteed portion of the outstanding balance |
| FY 2026 rate | 0.25% to 3.75% | 0.55% |
| Can the lender charge you? | Yes, under the timing rules above | No |
The SBA's lender page says the annual fee is based on the outstanding guaranteed balance and cannot be charged to the borrower. If a lender's quote includes a line for an annual SBA fee on your side, ask for an explanation. The lender may build its own costs into its pricing, but the SBA's annual fee itself is the lender's obligation.
Other costs to expect on an SBA loan
The guarantee fee is only one part of closing costs. Plan for these as well:
- Interest. SBA 7(a) rates are capped by formula and are usually variable or fixed depending on the lender's offer. Our guide to SBA loan current rates explains how that pricing works.
- Lender packaging and closing fees. Lenders may charge for the work of assembling and closing the loan, within SBA limits.
- Third-party reports. Appraisals, environmental reviews, title work and business valuations are common when real estate or a business purchase is involved.
- Legal fees. Your attorney and the lender's attorney may both bill.
- Personal guarantees. Not a fee, but a cost of risk. Owners with 20% or more of the business are typically asked to guarantee. We cover negotiation points in our piece on personal guarantees on business loans.
When you compare offers, ask each lender for a written estimate of total closing costs and the amount of the SBA fee being passed to you. Then compare the all-in cost, not the headline rate.
How to plan for the fee
Owners who are surprised by the guarantee fee usually are surprised because they assumed it would come out of the loan proceeds without changing their numbers. Work through this list before you apply:
- Estimate the fee early. Multiply your requested amount by the likely guarantee percentage, then by the tier rate. A $350,000 request at 75% guarantee is a $262,500 guaranteed portion, and 3% of that is $7,875.
- Decide how you will cover it. Some borrowers pay it at closing from cash, others ask whether it can be included in the financed amount. Ask the lender which option is available on your loan.
- Add it to your sources and uses. If you're buying equipment or a building, the project budget should include the fee alongside the down payment. Our guide to SBA 7(a) requirements covers the down payment and collateral side.
- Check for waivers. Manufacturers and veteran-owned businesses should confirm their eligibility in writing.
- Watch the 90-day window. If you may need two loans, ask whether sequencing them changes the fee.
- Compare with the 504 program for real estate and heavy equipment. The 504 program has its own fee structure. Our comparison of SBA 504 vs 7(a) helps you decide which fits.
Is the fee worth paying?
The fee is a cost, and it should be weighed against what it buys. For a business that cannot get a conventional bank term loan, the guarantee is what makes the approval possible. For a business that can, the comparison is between the SBA fee plus rate on one side and the bank's terms on the other.
SBA loans generally offer longer repayment terms than most alternatives, which lowers the monthly payment. On a $500,000 loan, an $11,250 fee spread over a 10-year term is about $94 a month before interest, a figure that is easy to compare against the monthly savings of a longer amortization. That is simple arithmetic, not a quote, but it is the kind of calculation we recommend running.
SBA loans are not the right answer for every situation. If you need money in days rather than weeks, or you have a specific short-term gap, other products may fit better. Our overview of business loans you should apply for as a startup explains how the options compare by speed and requirements.
Our perspective
We have worked with owners in construction, restaurants, HVAC, plumbing, retail and manufacturing since 2009, and the guarantee fee is one of the most common questions we hear when a borrower first looks at an SBA loan. The question usually isn't whether the fee exists. It is whether the borrower can see the whole cost before committing.
Our view is that the fee is fair to pay when the loan's term and rate solve a real problem, and that every owner should see it calculated in dollars before signing. Three habits help:
- Run your own number with the SBA calculator, then compare it with the lender's figure.
- Treat the fee as part of the project budget. A contractor buying a truck or an HVAC company adding a service van should include it in the cost of the asset.
- Match the product to the timeline. SBA financing is a strong fit for planned expansion, equipment, real estate and refinancing. When speed matters more than the lowest cost, a different structure may serve you better, and we say so.
We offer SBA loans alongside term loans, equipment financing, lines of credit and other products, so we can look at which one fits rather than pushing one. Our aim is that you understand the cost before you apply.
— Capital
Explore SBA financing with Capital for Business
If you are weighing an SBA loan, we can walk you through eligibility, estimated fees and timeline. Our SBA loans start from 6%, and we also offer business term loans from 7% for owners who want a different route. If your situation calls for something faster or more flexible, our funding solutions include working capital, lines of credit and equipment financing.
Tell us the amount, the purpose and your timeline, and we will show you which product makes sense and what it is likely to cost, including any program fees.
FAQ
What is the current SBA guarantee fee?
Under the FY 2026 schedule, the fee on 7(a) loans with maturities over 12 months is 2% of the guaranteed portion for loans up to $150,000, 3% for $150,001 to $700,000, and 3.5% to 3.75% above that. Loans of 12 months or less pay 0.25%. The SBA sets these by notice each fiscal year, so confirm the current schedule before you apply.
Who pays the SBA guarantee fee?
The SBA charges the fee to the lender. The lender is allowed to pass it on to the borrower, and most do. The timing is regulated: on longer loans the lender may charge you after the first disbursement.
Are SBA loans 100% guaranteed?
No. The SBA guarantees a portion of the loan, 75% on larger loans and a higher share on smaller ones. The lender carries the rest of the risk, and the guarantee fee is calculated only on the guaranteed share.
Are there SBA 7(a) fees besides the guarantee fee?
Yes. Lenders pay an annual service fee on the guaranteed outstanding balance, which cannot be charged to you. You may still pay interest, lender closing fees within SBA limits, third-party report costs and legal fees.
Can the guarantee fee be waived?
Sometimes. For FY 2026, manufacturers in NAICS sectors 31 to 33 with loans of $950,000 or less pay 0%, and SBA Express loans to veteran-owned businesses carry no upfront fee. Waivers depend on the fiscal year's notice, so ask your lender to confirm.
Sources
- SBA lender resources: Partnering with SBA loan programs
- 13 CFR 120.220, Fees that Lender pays SBA (eCFR)
- 13 CFR 120.220 (eCFR.io)
- SBA Information Notice 5000-872051: 7(a) Fees Effective October 1, 2025 for Fiscal Year 2026
- SBA Information Notice 5000-872051 (PDF)
- FY 2026 Loan Fees and 90-day clarification (NAGGL)
- SBA 7(a) Loan Guaranty Fee Calculator
- SBA 7(a) loans
- SBA waives loan fees for small manufacturers
- SBA Guarantee Fee: What It Is and How Much It Costs (NerdWallet)