The SBA guaranty fee, also called the upfront fee, is what SBA charges on the guaranteed part of an SBA loan, and the rate depends on the loan size, the program and the borrower. For 7(a) loans approved from October 1, 2026 through September 30, 2027, it is 2% of the guaranteed portion on loans of $150,000 or less, 3% from $150,001 to $700,000, and 3.5% above $700,000 (with 3.75% on the portion over $1 million) on loans with maturities longer than 12 months, with exceptions that bring it to 0%. Below you will find the full schedule, the waivers, a dollar example for $150,000, $500,000 and $1,000,000 loans, and how to calculate and pay the fee.
What is an SBA guaranty fee?
SBA provides a loan guarantee to lenders, and the guaranty fee is the charge for that guarantee. SBA does not lend to you directly on a 7(a) loan. You apply through a lender. In SBA Information Notice 5000-881797, the fee is named the “SBA Guaranty Fee (also known as the Upfront Fee),” and it sits alongside the Lender’s Annual Service Fee.
Fees are not fixed for all time. SBA reviews them every year “to determine the appropriate fees to manage the estimated costs of the 7(a) loan program.” The FY 2027 schedule applies to loans approved from October 1, 2026 through September 30, 2027. Loans approved before October 1, 2026 fall under the prior year’s schedule, which is a separate notice.
504 loans follow a parallel notice, SBA Information Notice 5000-881796. There the annual fee is called the “on-going guaranty fee,” and fees are effective for the entire fiscal year. See our guide to sba 504 equipment financing for more on the program.
How much is the SBA guaranty fee on a 7(a) loan?
The upfront fee is a percentage of the guaranteed portion of the loan. The size band is set by the gross loan approval amount, which includes both the SBA-guaranteed and unguaranteed portions. These bands apply to loans with a maturity longer than 12 months. For loans with a maturity of 12 months or less, the upfront fee is 0.25% of the guaranteed portion, subject to the exceptions below.
| Gross loan approval amount | Upfront fee (percent of guaranteed portion) |
|---|---|
| $150,000 or less | 2%. The lender may keep no more than 25% of this fee, so at least 1.5% must go to SBA. |
| $150,001 to $700,000 | 3% |
| $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 |
The annual service fee is 0.55% of the outstanding balance of the guaranteed portion, and it includes Working Capital Pilot loans. Your lender may not pass it on to you.
Several loans within 90 days. When two or more 7(a) loans with maturities over 12 months go to the same applicant, including its affiliates, within 90 days of each other, the notice treats them as one loan for the guaranty percentage and upfront fee. The second loan pays the combined fee minus what was paid or is due on the first, and the result is never negative. Each loan’s annual service fee is set on its own.
Is SBA waiving guaranty fees?
Not for every loan. The notice sets a 0% upfront fee for some businesses and certain loan types, and $0 for some veteran-owned SBA Express loans. The table below lists each exception as the notice gives it.
| Exception (7(a) unless noted) | Upfront fee | Condition in the notice |
|---|---|---|
| Loans to manufacturers (NAICS sectors 31-33) | 0% | Loans of $700,000 or less |
| Loans to food supply chain businesses (NAICS codes listed in the notice) | 0% | Loans of $700,000 or less |
| Loans to businesses located in a rural area | 0% | Loans of $700,000 or less |
| SBA Express loans to veteran-owned businesses (including businesses owned and controlled by a veteran’s spouse) | $0 | Lender must document eligibility in the loan file |
| Export Working Capital Program (EWCP) loans | 0.25% (12 months or less); 0.525% (13 to 24 months); 0.80% (25 to 36 months) | Percent of guaranteed portion; fee follows maturity |
| Working Capital Pilot (WCP) loans | 0.25% (12 months or less); 0.525% (13 to 24 months); 0.80% (25 to 36 months); 1.075% (37 to 48 months); 1.35% (49 to 60 months) | Percent of guaranteed portion; fee follows maturity |
WCP and EWCP upfront fees follow loan maturity, not the size bands above. If a WCP or EWCP loan is approved within 90 days of another 7(a) loan to the same applicant, the notice combines the loan amounts to set the guaranty percentage and the manufacturer fee relief. For calculating the upfront fee itself, WCP and EWCP loans are not combined with other 7(a) loans.
Manufacturing waiver
On a 7(a) loan, manufacturers in NAICS sectors 31-33 pay a 0% upfront fee on loans of $700,000 or less. The same is true for food supply chain businesses and businesses in a rural area at that loan size. On 504 loans, the notice waives both the upfront and the annual fee for manufacturers, food supply chain businesses and rural businesses, including loans under the 504 Debt Refinance with Expansion and 504 Debt Refinance without Expansion programs.
Veterans and SBA Express loans
For SBA Express loans to businesses owned and controlled by a veteran or the spouse of a veteran, the notice sets the upfront fee at $0. The notice ties this to federal law at 15 U.S.C. § 636(a)(31)(G) and says your lender must document your eligibility in the loan file. Ask your lender to confirm the annual service fee on your loan, because the notice’s $0 line is written for the upfront fee.
504 loan fees
For 504 loans approved from October 1, 2026 through September 30, 2027, the notice sets these fees. 504 loans are available only through Certified Development Companies, and the SBA 504 loan program page explains the program.
| 504 loan type | Upfront guaranty fee | Annual service fee (of outstanding balance) |
|---|---|---|
| Most 504 loans, not otherwise exempt | 0.50% | 0.203% |
| 504 Debt Refinance without Expansion that is not otherwise exempt | 0.50% | 0.204% |
| Manufacturers, food supply chain businesses and rural businesses, including debt refinance loans | Waived | Waived |
The 504 loan page also says the total “totals approximately 3% of the debt, rate may be financed with the loan.” Ask your Certified Development Company what that figure includes and whether the fees are part of it.
How do I calculate the SBA guaranty fee?
The math has four steps for a 7(a) loan:
- Find the gross loan approval amount, including the guaranteed and unguaranteed portions.
- Find the upfront fee band for that amount, and confirm the loan’s maturity is longer than 12 months.
- Multiply the fee percentage by the guaranteed portion. For loans from $700,001 to $5 million, calculate 3.5% of the guaranteed portion up to $1 million plus 3.75% of any guaranteed portion above $1 million.
- For the annual fee, multiply 0.55% by the outstanding balance of the guaranteed portion.
The formula gives you a quick estimate. Ask your lender to run the exact figure on your loan before you sign. Our guide to equipment financing explains how credit scores can affect rates.
Worked example: $150,000, $500,000 and $1,000,000 loans
These figures are a mathematical illustration. They assume each stated amount is both the gross loan approval amount and the guaranteed portion, and they apply only to non-exempt 7(a) loans with maturities over 12 months. The upfront fee is calculated on the guaranteed portion, so a smaller guaranteed portion produces a smaller fee. The annual fee column applies 0.55% to the full balance and falls as the balance is repaid.
| Loan approval amount | Upfront fee band | Upfront fee (rate times full loan) | Annual service fee at full balance (0.55%) |
|---|---|---|---|
| $150,000 | 2% (loans of $150,000 or less) | $3,000 | $825 |
| $500,000 | 3% (loans from $150,001 to $700,000) | $15,000 | $2,750 |
| $1,000,000 | 3.5% up to $1,000,000 (loans from $700,001 to $5,000,000) | $35,000 | $5,500 |
Under the manufacturing or rural waiver, the upfront fee on loans of $700,000 or less would be 0%. The $1,000,000 loan is above that threshold, so the waiver does not reach it.
How do I pay the SBA guaranty fee?
The fee runs through your lender. Here is what the notice says about who pays and how:
- Annual fee: the notice says lenders may not pass the Lender’s Annual Service Fee on to the borrower.
- Upfront fee: the notice describes these fees as payable to SBA by lenders and borrowers. On loans of $150,000 or less, the lender keeps no more than 25% and remits at least 1.5% to SBA.
- Financing: ask your lender whether the upfront fee can be added to the loan amount, and ask for the answer in writing.
- Extensions and increases: when a short-term 7(a) loan is extended beyond 12 months, the additional fee must be paid electronically within 30 days from the date the lender agrees to the extension, or the total loan guaranty will be canceled. When a 7(a) loan is increased, the additional fee must be paid electronically within 30 days from the date the increase was approved, or the total loan guaranty will be canceled. For an increase, the fee follows the rules in effect when the loan was first approved. WCP and EWCP extensions follow their own rule, under which an additional fee may be due based on the maturity schedule.
- Timing: for when FY 2027 fees are due, the notice points to SOP 50 10 8.1. SBA Information Notice 5000-880695 says SOP 50 10 8.1 applies to applications issued an SBA loan number on or after October 1, 2026.
Watch for payment scams. SBA’s SBA grants page says SBA only communicates from email addresses ending in @sba.gov. If someone claiming to be from SBA asks you to pay a fee, check the sender’s address first.
How do variable rates and prime affect my loan?
The rate math in this section applies to variable-rate loans that use Prime or the SBA Optional Peg Rate as their base; loans using SOFR, the 5-year Treasury note rate or the 10-year Treasury note rate are subject to the alternative-base-rate caps shown below. SBA Procedural Notice 5000-875051, effective March 1, 2026, sets the maximum spread over the base rate by loan size:
| Loan amount | Maximum spread over prime base | Maximum rate when an alternative base is used |
|---|---|---|
| $50,000 and less | Base rate + 6.5% | Prime + 6.5% |
| $50,001 to $250,000 | Base rate + 6.0% | Prime + 6.0% |
| $250,001 to $350,000 | Base rate + 4.5% | Prime + 4.5% |
| $350,001 and higher | Base rate + 3.0% | Prime + 3.0% |
The same notice lets 7(a) variable-rate loans use an alternative base rate instead of prime: SOFR, the 5-year Treasury note rate or the 10-year Treasury note rate. The prime rate is the rate in effect on the first business day of the month. The notice takes the Treasury alternatives from the Federal Reserve selected interest rates publication, last updated October 27, 2026, and identifies the Federal Reserve Bank of New York as the source for SOFR.
Fixed rates work differently. For a fixed-rate loan, the lender states the specific interest rate in the note, so the spread table does not apply the same way. For 504 loans, the SBA 504 loan program page describes the rate as pegged to an increment above the current market rate for 10-year U.S. Treasury issues, as of October 28, 2026.
Before you ask your lender
- The guaranteed portion your loan will use, since every percentage above applies to it.
- Which band your loan falls in, and whether its maturity is longer than 12 months.
- Who pays the upfront fee, and whether it can be added to the loan amount.
- Whether an exception applies, and what paperwork your lender will keep on file, such as veteran eligibility.
- The annual service fee amount for your balance, and how it changes as you repay.
Frequently asked questions
Is the SBA guaranty fee the same as the interest rate?
No. The fee is set in the fee notice each fiscal year. The interest rate follows the spread rules above when prime or an alternative base applies, or the note’s fixed rate when the loan is fixed.
Who do I contact about the fee?
Your lender handles the loan and its fees. The SBA 7(a) loan program page says you can reach your local SBA District Office for help with the process.
Can I use this as a calculator?
Yes, for a quick estimate. Use the four steps in the calculation section, and have your lender confirm the exact amount.
This is general information about SBA fees, not financial or legal advice for your business.
By USPatriotNews.com Editorial Team
