What does an SBA 7(a) loan cost when you buy a business?

An SBA 7(a) loan to buy a business costs more than its interest rate. For loans with a maturity over 12 months approved October 1, 2026 through September 30, 2027, SBA's upfront guaranty fee is 3 percent of the guaranteed portion on loans of $150,001 to $700,000. On loans of $700,001 to $5,000,000 it is 3.5 percent of the guaranteed portion up to $1,000,000, plus 3.75 percent of any guaranteed amount above that. The lender may pass the fee to the buyer.

This guide was reviewed on October 10, 2026 against SOP 50 10 version 8.1, which SBA lists as effective October 1, 2026, and against SBA Information Notice 5000-881797, "7(a) Fees Effective October 1, 2026 for Fiscal Year 2027," published September 3, 2026. SBA resets its fees each fiscal year, and the lender's written terms govern your loan. This is general information, not lending, legal or tax advice.

The interest rate has a federal ceiling, and the lender's other charges are limited to a short list. This guide covers the price of the loan. Whether you qualify, how much you put in and how the lender tests repayment are on the SBA 7(a) requirements guide and in what changed on October 1, 2026.

What fees does an SBA 7(a) loan to buy a business carry?

An SBA 7(a) loan carries fees paid to SBA, fees the lender may charge you, and one fee SBA can charge you directly, and each has its own rule. The lender owes SBA an upfront guaranty fee and an annual service fee. The lender may pass the upfront fee to you but may not pass the annual fee. Separately, 13 CFR 120.221 lets the lender collect from you only a listed set of charges, such as packaging and out-of-pocket costs. Interest sits outside all of these and has its own ceiling, covered below.

How is the SBA upfront guaranty fee calculated?

The upfront guaranty fee is a percentage of the guaranteed portion of the loan, and the loan's total size decides which percentage applies. For a loan with a maturity of more than 12 months approved in fiscal 2027, Information Notice 5000-881797 sets these amounts:

A loan with a maturity of 12 months or less pays 0.25 percent of the guaranteed portion instead, and the notice sets separate terms for Export Working Capital Program loans, Working Capital Pilot loans and SBA Express loans to veteran-owned businesses. An acquisition loan is normally longer than 12 months, so the table is the one to use. The notice measures the loan amount including both the SBA-guaranteed and unguaranteed portions. SBA's program terms guarantee up to 75 percent of a standard 7(a) loan above $150,000, and up to 85 percent at $150,000 or less. In June 2026, SBA guaranteed 74.5 percent of the dollars it approved on changes of ownership ($518,451,540 of $695,778,100), according to the SBA acquisition lending tracker built from SBA's own files.

The notice sets the fee at zero for loans of $700,000 or less to manufacturers (NAICS sectors 31 to 33), to the food supply chain codes it lists, and to businesses in a rural area. If the business you are buying could fit one of those, ask the lender in writing whether the relief applies.

Because the percentage depends on total loan size, crossing $700,000 raises the percentage on the whole guaranteed portion, up to the first $1,000,000 of it. At a 75 percent guaranty, a $700,000 loan has a $525,000 guaranteed portion and a $15,750 fee. A $700,001 loan has a guaranteed portion of about $525,000, well under $1,000,000, so the 3.75 percent tier does not reach it and the 3.5 percent rate applies to all of it, a fee of about $18,375.03, so one extra dollar of loan adds about $2,625.03 of fee. That is worth knowing before the sources-and-uses schedule is final.

Splitting the request does not get around it. When two or more 7(a) loans with maturities over 12 months are approved for an applicant and its affiliates within 90 days of each other, the notice treats them as one loan for the guaranty percentage and the upfront fee, and it bars lenders from splitting a loan to avoid fees.

Who pays the upfront fee and the annual service fee?

The lender owes both fees to SBA, and only the upfront fee can reach you. Under 13 CFR 120.220(b), the lender may charge you the fee after the first disbursement of a loan with a maturity over 12 months, and you may pay it from loan proceeds, but the first disbursement may not be made solely or primarily to pay it. SOP 50 10 version 8.1 adds that when proceeds will pay the fee, the SBA Terms and Conditions must include a use-of-proceeds category for it. A fee paid that way sits inside the loan and earns interest like the rest of the balance.

The annual service fee for fiscal 2027 is 0.55 percent of the outstanding balance of the guaranteed portion. The notice says lenders may not pass it to the borrower, and 13 CFR 120.220(f) says the same. It will not be a line on your closing statement.

How high can the interest rate go?

The lender negotiates the rate with you, and SBA caps it. For a variable-rate loan, 13 CFR 120.214(d) limits the rate to a spread over the base rate that shrinks as the loan grows:

SOP 50 10 version 8.1 allows Prime or the SBA Optional Peg Rate as the base rate. It also allows SOFR, the 5-year Treasury or the 10-year Treasury as an alternative base rate, with the combined rate capped by the same spreads over Prime. The base rate in effect on the first business day of the month that SBA receives a complete application sets the starting point. A maximum fixed rate also exists, tied to Prime and published by SBA, and a lender may use it only if the rate stays unchanged for the whole term. Standard 7(a) and 7(a) Small loans may not carry a default interest rate, while SBA Express and Export Express loans may use one in line with the lender's similar non-SBA loans, and no 7(a) lender may charge points or add-on interest.

What else can the lender charge?

Unless SBA Loan Program Requirements allow otherwise, the lender can charge and collect only the fees and expenses listed in 13 CFR 120.221. The list is packaging and service fees, a servicing fee of up to 2 percent a year on a part of the loan with extraordinary servicing needs and prior written SBA approval, out-of-pocket costs such as filing and recording fees, a late fee of up to 5 percent of the regular payment, and hourly legal charges.

SOP 50 10 version 8.1 puts limits on the packaging fee. A lender may charge a flat fee of up to $2,500 without documenting the service. A fee based on a percentage of the loan may not exceed the lender's own percentage on similar non-SBA loans or, if less, 5 percent on loans of $150,000 or less and 3 percent above that, with an overall maximum of $30,000 on a percentage basis. The lender must tell you in writing that you are not required to obtain or pay for unwanted services, and it must itemize its fees in writing. The same SOP prohibits commitment, origination, broker, commission and referral fees, prepayment fees and renewal fees.

What happens if you pay the loan off early?

The lender cannot charge a prepayment fee, but SBA can charge a subsidy recoupment fee on some loans. Under 13 CFR 120.223, the fee applies only to a loan with a maturity of 15 years or more, when the borrower voluntarily prepays more than 25 percent of the highest outstanding principal balance in one of the first three 12-month periods after first disbursement. The charge is 5 percent of the prepayment in the first period, 3 percent in the second and 1 percent in the third.

SBA's program terms set a maximum maturity of ten years unless the loan finances real estate or equipment with a useful life over ten years, up to 25 years. A loan with a maturity under 15 years is outside the fee, so the loan's maturity is the question to ask first.

A worked example with a fictional buyer

The buyer below is fictional. The $675,000 loan is the median approval for 7(a) changes of ownership in SBA's June 2026 loan-level data, the latest month in the tracker. The 75 percent guaranty, the 6.00 percent base rate and the ten-year term are assumptions chosen to show the arithmetic, not a quote or a forecast.

The fee is 2.25 percent of the loan at the start, and financing it for ten years at the ceiling rate adds $7,899.16 of interest, a little over half the fee again. The packaging figure is the most a lender could charge on a percentage basis, not what lenders typically charge. A flat fee of up to $2,500 needs no documentation.

What should you ask the lender to put in writing?

Ask for the numbers in one written proposal before you rely on a purchase price that assumes them.

1. The fee schedule that applies, and the guaranty percentage the lender expects to request.
2. Whether the upfront fee will be paid from proceeds, and the amount shown in the Terms and Conditions.
3. Every lender fee itemized: packaging, any amount reported on SBA Form 159, legal and out-of-pocket costs.
4. The base rate, the spread, the maximum rate for your loan size, and how often a variable rate can change.
5. The maturity, and whether a recoupment fee could apply if you pay early.
6. Whether manufacturer, food supply chain or rural fee relief applies.
7. Who pays for the independent business valuation and, at a purchase price of $3 million or more, the Quality of Earnings report the lender must order. This guide does not state who pays.

Put the results into the sources-and-uses schedule in the lender readiness checklist, and test the structure with the SBA structure check. The equity injection guide defines total project cost, the base for the 10 percent minimum, and the financing guide sets the loan beside the other sources.