"Your SBA guaranty fee is $19,294. Want us to roll it into the loan?" Pell (a made-up founder) almost said yes. Then she asked one question: what would the fee be at $700,000? The answer was zero.
This is general information, not legal or financial advice. Confirm every rule against the current SOP and your lender before you sign anything.
The one tip
Most 7(a) loans carry an upfront fee owed to SBA, called the SBA guaranty fee. Your lender pays it and is allowed to pass the cost to you. The fee is figured on the guaranteed part of the loan, but your total loan amount picks the percentage. So a small change in loan size can move you into a different bracket.
For 7(a) loans approved October 1, 2026 through September 30, 2027 (SBA Information Notice 5000-881797), with terms over 12 months:
$150,000 Or less: 2% of the guaranteed portion
$150,001 To $700,000: 3% of the guaranteed portion
$700,001 To $5,000,000: 3.5% of the guaranteed portion up to $1,000,000, plus 3.75% above that
The big one: for loans of $700,000 or less, the fee is 0% for manufacturers (NAICS 31-33), certain food supply chain businesses, and businesses located in a rural area. Above $700,000, that break disappears completely.
SBA guarantees up to 85% of loans of $150,000 or less and up to 75% of larger loans, or 50% for SBA Express (SOP 50 10 8.1, Appendix 16).
Worked example
Pell runs Brindlewort Hot Sauce Co. (a made-up sauce maker). Sauce bottling is manufacturing, NAICS sector 31. She wants a bottling line, a walk-in cooler and working capital: $735,000.
At $735,000, the guaranteed portion is 75%, or $551,250. The fee is 3.5% of that: $19,293.75.
At $700,000, a non-manufacturer would pay 3% of $525,000: $15,750.
At $700,000, Pell pays $0, because she's a manufacturer under the line.
So that extra $35,000 would have cost her $19,294 in fees. That's a fee equal to 55% of the last $35,000.
It also helps her coverage. Assume 10.25% over 10 years (an assumption for the math, not a quote). At $735,000 the payment is about $9,815 a month, or $117,781 a year. At $700,000 it's about $9,348 a month, or $112,173 a year. With $150,000 of yearly cash flow, her debt service coverage goes from 1.27 to 1.34.
Pell put $20,000 more of her own cash in and pushed a $15,000 label printer to next year. Loan: $700,000. Fee: $0.
One warning. Don't try to split it into a $700,000 loan now and a $35,000 loan next month. Two 7(a) loans approved within 90 days of each other are treated as one loan for the fee, even at different lenders. The notice says lenders can't split loans to avoid fees.
Do this week
Find your NAICS code and check it against the sectors and codes in Notice 5000-881797.
If you might be rural, look up your county in the Census Bureau's county-level urban and rural file. SBA counts a county that is at least 30% rural.
Get the fee from your lender in writing: loan amount, guaranteed portion, rate and dollar figure.
If you're within about 10% of $150,000 or $700,000, price the gap. Compare the fee you'd save to adding cash or trimming the project.
If you pay the fee from loan proceeds, it's part of the loan amount. Make sure the total still sits under the line.
Lock the final amount before closing. SBA only lowers the fee if it approves the smaller amount before the loan closes and first disburses. After that, no refund.
Sources: SBA Information Notice 5000-881797, 7(a) Fees Effective October 1, 2026 for Fiscal Year 2027, https://www.sba.gov/document/information-notice-5000-881797-fy-2027-7a-program-fees ; SBA SOP 50 10 8.1 (with Technical Policy Updates, effective October 1, 2026), Section A, Ch. 4, Para. C (7(a) loan program fees), Appendix 3 (Rural Area definition) and Appendix 16 (guaranty percentages), https://www.sba.gov/document/sop-50-10-lender-development-company-loan-programs ; 13 CFR 120.220 (fees), https://www.ecfr.gov/current/title-13/section-120.220 ; 13 CFR 120.210 (guaranty percentages), https://www.ecfr.gov/current/title-13/section-120.210 ; Census Bureau urban and rural data, https://www.census.gov/programs-surveys/geography/guidance/geo-areas/urban-rural.html
Verified against SOP 50 10 8.1 text and SBA Information Notice 5000-881797: October 17, 2026.
FAQ
How much is the SBA 7(a) guaranty fee?
For loans approved October 1, 2026 through September 30, 2027 with terms over 12 months, it's 2% of the guaranteed portion for loans of $150,000 or less, 3% for $150,001 to $700,000, and 3.5% up to $1,000,000 of guaranteed portion plus 3.75% above that for larger loans.
Is the fee based on the whole loan?
No. Your total loan amount sets the percentage, but the fee is charged on the guaranteed portion only, usually 75% of loans over $150,000.
Who pays the SBA guaranty fee?
The lender must pay it to SBA. The lender is allowed to pass the cost to you, and it can charge you after the first disbursement.
Can I pay the guaranty fee with loan money?
Yes, if your SBA terms list it as a use of proceeds. The first disbursement can't be made mainly to pay the fee.
Who gets a 0% guaranty fee right now?
For loans of $700,000 or less approved October 1, 2026 through September 30, 2027: manufacturers (NAICS 31-33), listed food supply chain businesses, and businesses in a rural area. SBA Express loans to veteran-owned businesses also pay $0.
Can I split my loan into two to get a lower fee?
No. Two 7(a) loans approved within 90 days of each other are combined for the fee and guaranty percentage, even at different lenders.