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If you are trying to work out what a broker is costing you on a large SBA loan, it helps to start with the largest number on the closing statement, which is rarely the broker’s number. Under the fee schedule the SBA set for fiscal year 2026, a 7(a) loan between $700,001 and $5,000,000 carries an upfront guaranty fee of 3.5 percent of the guaranteed portion up to $1 million, plus 3.75 percent of the guaranteed portion above that, according to the FY2026 fee schedule circulated to 7(a) lenders. On a $2,000,000 loan carried at the 75 percent guaranty that applies above $150,000, the guaranteed portion is $1,500,000, and the arithmetic produces an upfront fee of $53,750. That figure has nothing whatsoever to do with a broker, and yet brokers get blamed for it fairly regularly.
That confusion is the underlying problem with most of the writing on this subject. Government fees, lender fees, and agent compensation are separate pots of money that are paid by different parties at different points in the process, under different rules. Rather than listing the fees alphabetically, this article follows the money through a deal in the order that the money actually moves.
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Four definitions do most of the work here, and they are worth getting straight before the stages.
An agent is any authorized representative acting for an applicant or a lender on an SBA matter, which under Part 103 of Title 13 of the Code of Federal Regulations expressly includes attorneys, accountants, consultants, packagers, lender service providers, and referral agents. Broker is a commercial word rather than a regulatory one, so in SBA’s own language, the person you are dealing with is an agent.
A packaging fee is compensation for assembling and preparing the loan file: the application, the financial exhibits, the projections, the eligibility narrative.
A referral fee is compensation for introducing a borrower to a lender. It can be paid by the applicant or by the lender, and which one pays changes the rules considerably.
A success or placement fee is compensation that is only earned when the loan actually funds. It is a timing arrangement rather than a separate category of work.
The first thing that changes hands in a brokered deal is usually paperwork rather than money.
An agent who is going to be compensated in connection with an SBA business loan has to execute a compensation agreement, which is not optional and not a courtesy document. The regulation covering agent conduct requires the applicant, agent, or packager to execute and provide that agreement to SBA. In practice, it is delivered on SBA Form 159, the Fee Disclosure and Compensation Agreement, which we will come back to at funding because that is when it gets filed.
Some agents also ask for a retainer or an engagement fee at this point. That is not automatically improper. What makes it improper is charging for work that does not happen, because SBA treats any fee that does not bear a necessary and reasonable relationship to the services actually rendered as grounds for suspension or revocation of the privilege of doing business with the agency.
There is one detail here that borrowers rarely notice, which is that the lender is required to tell the applicant in writing that the applicant is not obligated to use an agent at all. If you have not been told that in writing, it is reasonable to assume a step was skipped somewhere.
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Packaging is the stage where a competent agent earns whatever it is that they are being paid. A large 7(a) file is a good deal more than a completed form, since it will typically include three years of business and personal tax returns, interim statements, a debt schedule, a use of proceeds breakdown, affiliate analysis, a projection model that survives a credit officer reading it, and, on an acquisition, a valuation and a purchase agreement that the lender’s counsel will pick apart.
Two different parties can charge for this, and they are governed differently.
If the lender packages the file, its charges fall under 13 CFR 120.221, which permits reasonable fees that are customary for similar lenders in the same geographic area, along with out-of-pocket expenses such as filing and recording fees. That same section allows an extraordinary servicing fee of up to 2 percent per year on the outstanding balance, but only with prior written SBA approval and only where the loan genuinely requires higher-touch servicing, such as construction or asset-based structures.
If an outside agent packages the file, the compensation is disclosed on Form 159, and once total compensation passes $2,500, the agent has to attach a breakdown of the work performed, the hourly rates, and the hours spent on each activity. Below that line, the itemization is not attached, though SBA can ask for it later regardless of the amount.
What surprises most borrowers is that there is no published rate card for any of this. SBA applies a reasonableness standard instead of a fixed schedule, and it reserves the right to review the compensation, require a reduction, and require a refund of any amount it considers excessive.
This is the stage that is worth slowing down for, because it largely determines whose interests the person advising you is aligned with.
A referral fee can move in either direction, in that the applicant can pay the agent or the lender can pay the agent, but it cannot move in both directions at once for the same service. Agents are barred from acting as a lender service provider or referral agent and as a packager for the applicant on the same SBA business loan while collecting from both the applicant and the lender, subject to a narrow disclosure exception. Practitioners call it the two master rule, and it is the single most common place where an otherwise ordinary fee arrangement goes wrong.
If a lender pays a referral fee to a referral agent, that cost cannot be passed through to the applicant, directly or indirectly. Form 159 asks the lender to certify exactly that.
That certification is worth reading twice, because it is the mechanical reason a lender-paid arrangement can genuinely cost the borrower nothing, as opposed to costing the borrower something that has simply been given a different label.
Several firms are built entirely on that side of the arrangement. 7aSavvy, for example, runs an SBA 7(a) loan broker service on a lender-paid basis: it connects a borrower with the SBA 7(a) lender it judges to be the best fit for that specific loan, and it is compensated by a referral fee from that lender when the loan funds, so the borrower is not invoiced for the brokering at any point. The firm brokers the large end of the program, roughly $500,000 to $5,000,000, which is the range where fintech lenders tend to drop out and where lender selection does the most work. It stays on the file through closing rather than handing it off at the introduction, escalating its involvement as the deal size grows, and it will place the borrower with a different lender in its network if the first one stalls.
The trade-off is worth naming honestly. A lender-paid agent has an incentive to close a loan, and a borrower-paid agent has that same incentive, so neither structure is automatically the purer of the two. What a lender-paid structure does remove is the specific conflict in which you are billed whether or not the financing ever appears.
By the time the file is in credit, the fees stacking up are mostly not the agent’s.
The upfront guarantee fee is the largest of them in most deals. It is charged on the guaranteed portion rather than the full loan; it scales with size, and for fiscal year 2026 it runs at 2 percent for loans of $150,000 or less, 3 percent from $150,001 to $700,000, and the 3.5 plus 3.75 percent structure described at the top for loans above that, with 0.25 percent applying to maturities of twelve months or less. Manufacturers borrowing $950,000 or less carry a 0 percent upfront fee for the year. The lender owes the fee to SBA and is permitted to pass it to the borrower after disbursement, which is why it usually shows up in your closing costs.
The annual service fee, capped at 0.55 percent of the outstanding guaranteed balance, works the opposite way. Under 13 CFR 120.220, the lender pays that fee, and it cannot be charged to the borrower, so if you find it itemized on your side of the settlement statement, it is worth asking the lender why it is there.
Then there are the third-party costs that belong to nobody in particular: appraisal, business valuation, environmental review where the collateral calls for it, title work, and legal fees. Those are real expenses; they vary by market and by property, and an honest broker will tell you they cannot quote them precisely in advance.
Success-based compensation is paid at or after funding, which is the arrangement most large loan borrowers should expect and most brokers on large files prefer.
The paperwork closes out here as well. SBA Form 159 is signed by the lender, the applicant, and each agent paid by the applicant. The agent certifies that the compensation covers services actually performed, that it is the only compensation charged, that the agent is not debarred or otherwise excluded from federal programs, and that any amount SBA later deems unreasonable will be refunded. The lender keeps the original in the loan file and sends a copy to the fiscal transfer agent with the first Form 1502 report after initial disbursement.
That certification is why the honest answer to “can the fee be rolled into the loan” is more complicated than yes or no. It depends entirely on which fee and who is charging it.
This is the point at which the published data runs out, so the paragraphs below should be read as informed guidance rather than as a statistic.
If you compare what different publishers claim on this, the spread is fairly wide. One broker resource puts origination at 1 to 3 percent of the loan amount and packaging between $2,000 and $4,000. A commercial finance platform puts SBA referral and packaging compensation at 0 to 1 percent. A broker technology firm publishes a table with 1.00 to 1.50 percent for deals between $1 million and $5 million. Those numbers cannot all be describing the same market, and none of them is an SBA figure; they are house estimates published by companies that have an interest in the answer.
Our own read, formed on the packaging side rather than from a survey, is that on a $500,000 to $5,000,000 7(a) request, a borrower-paid arrangement commonly lands somewhere between 1 and 3 percent of the loan amount, with the percentage falling as the loan gets larger, and that lender-paid referral compensation typically sits below what a borrower-paid engagement would cost. That is judgment rather than published data, and any article that presents a range of that kind as a statistic is telling you something it cannot actually support.
What the number buys matters considerably more than the number itself. It is worth asking which of the following the fee is meant to cover: financial packaging, lender selection, managing the credit process, coordinating the third-party reports, and staying on the file through closing. A 1 percent fee for an introduction and a 2 percent fee for full deal management are two different purchases.
Four things are probably better treated as warnings than as matters of preference. The first is a substantial upfront fee collected before any lender has actually seen the file. The second is a refusal to put the compensation in writing, or vagueness when Form 159 comes up. The third is any indication that the agent is collecting from both you and the lender on the same service. The fourth is a guarantee of approval, which very few people outside a credit committee are in a position to give.
Either can, and that is a real choice rather than an industry convention. If the applicant pays, the compensation is disclosed on Form 159 and itemized above $2,500. If the lender pays a referral fee, the regulations and the form’s certification both bar the lender from passing that cost to the applicant, directly or indirectly. What cannot happen is the agent collecting from both sides for the same service.
Sometimes, depending on the fee and the lender’s policy on eligible use of proceeds. Certain packaging and professional costs associated with getting the loan closed can be included in the financing package; a pure referral fee paid by the lender is not a borrower cost in the first place and therefore is not something to finance. Ask the lender to show you where each item sits in the use of proceeds before closing rather than after.
Yes, with a condition. The regulations state plainly that a fee based solely on a percentage of a loan or guarantee amount can be reasonable depending on the circumstances. The test SBA applies has less to do with the structure of the fee than with whether the fee bears a necessary and reasonable relationship to the services that were actually rendered, and SBA can require both a reduction and a refund if it decides that the fee failed that test.
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The useful discipline here is to sort every line item on the sheet by who is charging it and when it is owed. Government fees are set by a schedule that is published annually. Lender fees are governed by a reasonableness and customary practice standard. Agent compensation is governed by disclosure, by the two master prohibition, and by whether the work was in fact performed.
Once the lines have been sorted that way, most of the anxiety that surrounds broker fees tends to go away. What is left is a narrower question and a considerably easier one to answer: for the size and the complexity of the loan you are seeking, is the scope of work you are buying worth the amount you are being asked to pay for it, and is the person asking willing to put all of it on the form?
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