SBA guarantee fees help cover the Small Business Administration's costs when borrowers default on loans. These fees are charged on the guaranteed portion of SBA 7(a) loans, which are commonly used for business acquisitions, especially when collateral is limited.

• $150,000 or less: 2% of guaranteed portion
• $150,001 to $700,000: 3% of guaranteed portion
• $700,001 to $5,000,000: 3.5% on first $1MM guaranteed + 3.75% on amounts over $1MM
• 12 months or less: 0.25% of guaranteed portion

• Acquisition costs have increased. If you're financing a business purchase over $150,000 with an SBA loan approved after March 27, 2025, you'll now pay 2-3% in guarantee fees versus the previous 0%.
• Example impact: On a $500,000 business acquisition with 75% SBA guarantee ($375,000 guaranteed portion), you'll pay $11,250 in guarantee fees (3% × $375,000).
• The silver lining: These fees can typically be rolled into the loan and amortized over the life of the loan, spreading the cost over 7-10 years rather than paying upfront.

Potentially good news. Since upfront fees are typically rolled into loans and amortized, a 2-3% increase in borrowing costs could translate to a 2-3% increase in sale price as buyers factor these costs into their offers.

Alternatively, the additional costs might:

• Reduce buyer ROI expectations
• Expand your buyer pool by making deals more attractive to lenders
• Increase buyer eagerness due to improved loan accessibility

• Veteran-owned businesses: $0 upfront fees for all SBA Express loans
• Working Capital Pilot loans: No upfront fees for loans $1,000,000 or less

The SBA reinstated fees to ensure the loan program remains self-sustaining without requiring additional congressional appropriations. Previous pandemic-era fee reductions were creating sustainability concerns.

Factor these new costs into your acquisition analysis. The 2-3% fee increase is significant but manageable when amortized over the loan term.

Consider how these changes might affect your buyer pool and pricing strategy. The impact could be neutral if buyers adjust their offers accordingly.

SBA 504 loans still have no guarantee fees for FY 2025, making them attractive for real estate-heavy acquisitions.

While SBA guarantee fee increases add costs to business acquisitions, the SBA loan program remains one of the most attractive financing options for business buyers. The key is understanding these costs upfront and factoring them into your transaction planning.

Our advisors stay current on financing changes that affect business transitions. Contact our team to discuss how these updates impact your specific situation.