SBA loans are incredibly popular because they are known for offering the best rates in the market. In 2020, SBA loans reached a record high for lending. The SBA closed on almost nine million loans worth $750 billion.

How Much Does An SBA Loan Cost?

Various factors affect the cost of an SBA loan. Different types of SBA loans have a variety of terms and interest rates. Currently, small businesses in the US can borrow amounts up to $5 million and can borrow for up to 25 years. However, standard 7(a) SBA loans typically have terms of 10 years.

What Are Typical Closing Costs For SBA Loan?

• Packaging Fees: $2,500 – $5,000
• Appraisal Fees: $1,250 to $5,000
• Business Valuation Fees: $5,000 to $30,000
• Environmental Report Fees: $2,000 to $3,000
• Title Fees: $1,000 to $2,000
• Attorney Fees: $2,000 to $3,000

When calculating the cost of an SBA loan, you need to think about more than just the interest rate. There are additional costs that you will incur at closing. Sometimes these will be wrapped up in the total of your loan. Other times you may pay these costs upfront to obtain the loan.

Some typical closing costs you can expect to pay when obtaining an SBA loan include:

Packaging Fees:  With all the paperwork that needs to be put together and organized along with all the background and credit checks that need to be done there are costs involved in this for the lender.  These expenses usually are covered in a packaging fee the lender will require in the due diligence period before the loan is actually approved.  The usual fee for this is between $2,500 – $5,000.  This is a fee that will have to be paid prior to close but may be refunded or portions of it be refunded if the loan does not close for some reason that is not the fault of the borrower misrepresenting information.

Appraisal Fees: If you are using property or another asset as collateral on your loan, you will need to have it appraised. Fees can range greatly depending on the state. In Illinois, commercial real estate appraisals can range from $1,250 to $5,000.

Business Valuation Fees: If you plan to use your SBA loan to purchase a business, that business will need to be appraised. Business valuations fees also vary, depending on the type of business you are buying and how complicated the valuation is. You can expect to pay between $5,000 to $30,000.

Environmental Report Fees: If you are making a commercial real estate purchase with your loan amount, your lender will likely require you to complete an environmental report. It will highlight any risk from the environment that may affect the property and its value in the future. These surveys can cost between $2,000 to $3,000.

Title Fees: If you are investing in real estate for your business, you will need to ensure that it has a clean title before making your purchase. Fees for searches and filing your new title at closing will range from $1,000 to $2,000.

Attorney Fees: With all the paperwork that taking out a loan requires, you will need an attorney to review it. Attorney fees for evaluating your loan documents will typically cost from $2,000 to $3,000.

SBA Loan Fee Calculator

If you are considering an SBA loan, you can figure out how much you will have to pay in fees, which is usually between 3-4% of the total amount borrowed.

Here is an example of how to calculate your SBA fees if you borrowed $1M:

$1,000,000 loan X 75% of the loan guaranteed = $750,000

$750,000 X 3.5% SBA fee = $26,250 loan cost