What the guaranty fee is
When a bank makes a 7(a) loan, the Small Business Administration guarantees part of it: if you default, the SBA covers that share of the lender’s loss. In exchange, the SBA charges the lender an upfront guaranty fee, and lenders almost always pass it on to the borrower.
Two things surprise most borrowers:
- The fee is charged on the guaranteed portion, not the whole loan.
- The fee rules are set for each SBA fiscal year, which runs from October 1 to September 30. The same loan can carry a different fee depending on its approval date.
Step 1: Work out the guaranteed portion
| Loan | SBA guaranty |
|---|---|
| Standard 7(a), $150,000 or less | 85% |
| Standard 7(a), over $150,000 | 75% |
| SBA Express (up to $500,000) | 50% |
The maximum guaranty on any 7(a) loan is $3.75 million, reached on a $5 million loan at 75%.
So a $500,000 loan has a guaranteed portion of $375,000, and a $100,000 loan has $85,000.
Step 2: Apply the fee tier
For loans with maturities over 12 months, fiscal 2026 and fiscal 2027 use the same tiers:
| Gross loan amount | Upfront fee (on the guaranteed portion) |
|---|---|
| $150,000 or less | 2% |
| $150,001 to $700,000 | 3% |
| $700,001 to $5,000,000 | 3.5% on the first $1,000,000 guaranteed, plus 3.75% on the guaranteed amount above $1,000,000 |
| Any size, maturity 12 months or less | 0.25% |
Note that the tier is chosen by the gross loan amount, but the percentage is applied to the guaranteed portion.
Worked examples
| Loan | Guaranteed | Fee calculation | Upfront fee |
|---|---|---|---|
| $100,000, 10 years | $85,000 | 2% × $85,000 | $1,700 |
| $350,000, 10 years | $262,500 | 3% × $262,500 | $7,875 |
| $500,000, 10 years | $375,000 | 3% × $375,000 | $11,250 |
| $1,500,000, 10 years | $1,125,000 | 3.5% × $1,000,000 + 3.75% × $125,000 | $39,687.50 |
| $5,000,000, 25 years | $3,750,000 (capped) | 3.5% × $1,000,000 + 3.75% × $2,750,000 | $138,125 |
| $300,000, 12 months | $225,000 | 0.25% × $225,000 | $562.50 |
Step 3: Check for a waiver
This is where the fiscal year matters.
Fiscal 2026 (loans approved October 1, 2025 to September 30, 2026). Manufacturers (NAICS sectors 31–33) borrowing $950,000 or less paid a 0% upfront fee. SBA Express loans to veteran- or veteran-spouse-owned businesses also carried no upfront fee.
Fiscal 2027 (loans approved October 1, 2026 to September 30, 2027). As reported ahead of the SBA notice, the waiver widens to cover manufacturers, specified food supply-chain businesses and businesses located in rural areas, but the loan-size limit falls to $700,000. The veteran Express waiver continues.
Two consequences:
- A $600,000 loan to a rural business pays $0 in fiscal 2027 but would have paid 3% × $450,000 = $13,500 in fiscal 2026.
- An $800,000 loan to a manufacturer paid $0 in fiscal 2026 but pays 3.5% × $600,000 = $21,000 in fiscal 2027.
If your approval date falls near October 1, ask your lender which fiscal year’s schedule applies. It’s set by the approval date, not the closing date.
We’ll update this page when the SBA’s fiscal 2027 notice is confirmed against the primary source. Our calculator flags the fiscal 2027 schedule as not yet verified until then.
Who actually pays, and how
The lender owes the fee to the SBA, but the SBA allows lenders to recover it from the borrower. You’ll typically see one of three treatments:
- Deducted from the proceeds. You borrow $500,000 but receive $488,750.
- Added to the loan. You borrow $511,250 and receive $500,000.
- Paid in cash at closing.
There’s also an annual service fee of 0.55% of the guaranteed balance. It’s the lender’s cost: the SBA’s fiscal 2026 and 2027 rules don’t allow it to be charged to the borrower.
What the fee does to your APR
On the $500,000 loan at Prime (7.00%) plus 2.75%, a 9.75% note rate over 10 years:
| Fee treatment | Monthly payment | Estimated APR |
|---|---|---|
| Deducted from proceeds | $6,538.51 | 10.29% |
| Added to the loan | $6,685.63 | 10.28% |
Either way, the fee adds a little over half a point to the effective rate over ten years. Over a longer term the effect shrinks, because the one-time fee is spread over more years: a $1.5 million loan’s APR is 10.39% over 10 years but 10.09% over 25.
The rate caps
The guaranty fee is only part of the cost. The SBA also caps the interest rate lenders can charge. For variable-rate loans priced off Prime:
| Loan size | Maximum rate |
|---|---|
| $50,000 or less | Prime + 6.5% |
| $50,001 to $250,000 | Prime + 6.0% |
| $250,001 to $350,000 | Prime + 4.5% |
| Over $350,000 | Prime + 3.0% |
With Prime at 7.00%, that’s a ceiling of 13.00% on a $100,000 loan but 10.00% on a $500,000 loan. Since March 2026, lenders may also tie variable 7(a) loans to other base rates, and fixed-rate loans have their own maximums. Check your offer against the current SBA rules.
Other fee details worth knowing
- Multiple loans within 90 days to the same borrower are generally combined to set the fee tier, so splitting a loan in two won’t drop you into a lower bracket.
- Loan increases can trigger an additional fee on the increase.
- Packaging and other lender fees are separate from the SBA fee and are limited by SBA rules. Ask for an itemized list.
- The 504 program has a different fee structure altogether. This guide covers 7(a) only.
Try it
The SBA 7(a) calculator applies the right fiscal year’s schedule to your application date, includes the waivers, and shows the payment and APR with the fee treated however your lender plans to handle it.
Run your own numbers. Monthly payment, guaranty fee for the current SBA fiscal year, and the rate cap check.
Open the sba 7(a) loan calculatorSources
- SBA Information Notice 5000-872051: 7(a) Fees Effective October 1, 2025 for Fiscal Year 2026 (accessed 2026-09-26)
- NAGGL, FY 2026 Loan Fees and Clarification of Fee Calculation (accessed 2026-09-26)
- SBA, SBA Waives Loan Fees for Small Manufacturers in Fiscal Year 2026 (news release) (accessed 2026-09-26)
- Coleman Report, FY 2027 fee relief for grocery, manufacturing and rural businesses (accessed 2026-09-26)
- SBA, 7(a) loan program terms, conditions and eligibility (accessed 2026-09-26)