7(a) Fees Effective October 1, 2022, for Fiscal Year 2023

Summary

SBA Information Notice, Control No. 5000-836123, effective August 31, 2022, to SBA employees and 7(a) lenders, announcing 7(a) fees effective October 1, 2022 for fiscal year 2023. It explains that each year SBA reviews certain fees payable by 7(a) lenders and borrowers to manage the estimated costs of the 7(a) loan program. The notice announces the Lender's Annual Service Fee and the SBA Guaranty Fee (Upfront Fee) for FY 2023 and the exceptions to those fees. The fees apply to all 7(a) loans approved from October 1, 2022 through September 30, 2023.

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Full text

SBA Information Notice

TO: All SBA Employees and 7(a) Lenders CONTROL NO.: 5000-836123

SUBJECT: 7(a) Fees Effective October 1, 2022, EFFECTIVE: August 31, 2022
for Fiscal Year 2023

Each year SBA reviews certain fees payable to SBA by 7(a) Lenders (“Lenders”) and borrowers
to determine the appropriate fees to manage the estimated costs of the 7(a) loan program. 1

This Notice announces (1) the 7(a) Lender’s Annual Service Fee (also known as the “Lender’s
Annual Service Fee”) and the SBA Guaranty Fee (also known as the Upfront Fee) for 7(a) loans
for fiscal year 2023 (FY 2023), and (2) the exceptions to those fees authorized for FY 2023 for
the 7(a) loan program.

The following fees are effective for all 7(a) loans approved on October 1, 2022, through and
including September 30, 2023. For guidance on when all 7(a) loan fees are due, see SOP 50 10 6,
Part 2, Ch. 5, Para. C. All loan amounts are based on the gross loan approval amount, including
the SBA-guaranteed and unguaranteed portions.

1. 7(a) Lender’s Annual Service Fee: The FY 2023 Lender’s Annual Service Fee, based on
gross loan approval amount, including SBA-guaranteed and unguaranteed portions, will be:
a) For loans of $500,000 and less: 0.00%.
b) For loans of $500,001 to $5,000,000: 0.55% of the guaranteed portion of the outstanding
balance of the loan.
Lenders must manually adjust this fee in the Authorization Wizard.

2. Upfront Fee: Except for Export Working Capital Program (EWCP) loans and SBA Express
loans made to veteran-owned businesses, as defined in the attachment to this Notice, the
FY 2023 Upfront Fee, based on gross loan approval amount, including SBA-guaranteed and
unguaranteed portions, will be:

1 Fees are effective for the entire fiscal year to maintain the estimated costs of the program unless subsequent Congressional acts

modify the program’s effective subsidy costs.

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a) For loans with a maturity that exceeds 12 months, the Upfront Fees are:
i) For loans of $500,000 or less: 0.00%:
ii) For loans of $500,001 to $700,000: 0.55% of the guaranteed portion.
iii) For loans of $700,001 to $1,000,000: 1.05% of the guaranteed portion.
iv) For loans $1,000,001 to $5,000,000: 3.5% of the guaranteed portion up to $1,000,000,
plus 3.75% of the guaranteed portion over $1,000,000.
b) For loans with a maturity of 12 months or less, the Upfront Fees are:
i) For loans of $500,000 or less: 0.00%.
ii) For loans $500,001 and greater: 0.25% of the guaranteed portion.
3. Multiple 7(a) loans made within 90 days of each other: When two or more 7(a) loans
(with maturities exceeding 12 months) made to an applicant (including its affiliates) are
approved within 90 days of each other, the loans are considered as one loan for the purpose
of determining the percentage of guaranty.

Lender’s Annual Service Fee: The fee is set for each loan on a standalone basis without
respect to any other loans made (i.e., the loans are not aggregated).

Upfront Fee: The applicable fee for the subsequent loan(s) will equal the amount of the fee
that would have been charged had the loans been combined, less the fee that was paid or is
due to be paid on the first loan approved. The fee will never be a negative amount.

Example 1: On September 1, 2022 (FY 2022), a loan was approved for $400,000 and was
subject to a 2.77% Upfront Fee per the fee schedule for FY 20222. The Upfront Fee due
was $8,310 ($400,000 x 0.75 x 0.0277). On October 3, 2022 (FY 2023), the borrower
received a second loan for $50,000 and was subject to a 0% Upfront Fee per the fee
schedule for FY 2023. The Upfront Fee paid, or due to be paid on the first loan remains at
$8,310.

Example 2: On October 5, 2022 (FY 2023), a loan was approved for $400,000 with $0
Upfront Fee due. On November 15, 2022, a second loan was approved for $150,000,
taking the total of the two loans made within 90 days to $550,000 and making them
subject to the 90-day rule. Therefore, an Upfront Fee of $2,269 (0.55% of the combined
guaranty portions of the loans, or $550,000 x 0.75 x 0.0055) will be due. However, if the
second loan was approved more than 90 days after the first loan was approved, no fee
would be due.

Lenders are not permitted to split loans for the purpose of avoiding fees. These rules apply
regardless of whether the loans were approved by the same or different 7(a) Lenders.

2
See SBA Information Notice 5000-818641 for 7(a) fees for FY 2022.

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4. Additional Upfront Fee for Extensions of Short-Term 7(a) Loans
When the maturity of a short term 7(a) loan greater than $500,000 is extended beyond
12 months, an additional Upfront Fee is due. In addition, as stated in paragraph 5 below,
when an EWCP loan greater than $500,000 with an original maturity of up to 24 months is
extended beyond the original maturity date and up to 36 months, an additional Upfront Fee is
due. Lenders may contact the appropriate SBA Commercial Loan Service Center (or the
Office of International Trade for EWCP loans) for assistance. The additional fee must be
paid electronically to SBA within 30 days from the date the Lender agrees to the extension,
or the total loan guaranty will be cancelled. The Lender may charge the additional fee to the
borrower after the Lender has notified SBA that the maturity has been extended and has paid
the additional Upfront Fee.

5. Upfront Fee for EWCP Loans of any Size (up to $5 million maximum):
a) For EWCP loans of $500,000 or less, regardless of maturity, the Upfront Fee is 0.00%;
b) For EWCP loans greater than $500,000 with a maturity of 12 months or less, the Upfront
Fee is 0.25% of the guaranteed portion;
c) For EWCP loans greater than $500,000 with a maturity of 13 up to 24 months, the
Upfront Fee is 0.525% of the guaranteed portion;
d) For EWCP loans greater than $500,000 with a maturity of 25 up to 36 months, the
Upfront Fee is 0.80% of the guaranteed portion.
When an EWCP loan greater than $500,000 with an original maturity of up to 24 months is
extended beyond the original maturity date and up to the maximum EWCP maturity of 36
months, an additional Upfront Fee is due to SBA. The Lender must pay SBA the difference
in the Upfront Fee originally paid and what the fee would have been if initially approved at
the new longer maturity.

Example: If an EWCP loan greater than $500,000 is originally approved with a 24-month
maturity and the maturity is extended to 36-months, the Upfront Fee due to SBA is then
increased from 0.525% of the guaranteed portion to 0.80% (guaranty fee for EWCP loans
with maturities of 25 months up to 36 months) of the guaranteed portion of the EWCP
loan. Therefore, the Lender must remit to SBA the additional Upfront Fee of 0.275% of
the guaranteed portion (the updated guaranty fee due of 0.80% minus the 0.525%
guaranty fee already paid).

6. Additional Fee for 7(a) Loan Increases
When a 7(a) loan is increased, additional fees are due on that amount. The additional fees are
based on the rules in effect at the time the loan was originally approved.
a) The amount of the additional Upfront Fee due for an increase will equal what the fee
would have been if the increase was part of the original loan amount, less the amount of
the original fee (if already remitted).
Example 1: Loan made in FY 2022 and increased in FY 2023: A 7(a) loan was
made in FY 2022 for $350,000 with a 75% guaranty. When the loan was initially

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made in FY 2022, the Upfront Fee was $0, per the FY 2022 fee schedule for loans of
$350,000 or less. In FY 2023, the loan was increased from $350,000 to $400,000.
Even though the loan is being increased in FY 2023, the loan remains subject to
FY 2022 fees, which for loans $350,001 to $700,000, is 2.77%. The amount of the
Upfront Fee due to SBA is increased from $0 to $8,310 ($400,000 x 0.75 x 0.0277).
Example2: Loan made in FY 2023 and subsequently increased in FY 2023:
A loan was made in FY 2023 for $680,000 with a 75% guaranty. The Upfront Fee
due is $2,805 ($680,000 x 0.75 x 0.0055), per the FY 2023 fee schedule.
Later in FY 2023, the loan is increased from $680,000 to $705,000. The FY 2023 fee
schedule indicates the Upfront Fee for loans $700,001 to $1,000,000 is 1.05%. The
guaranty percentage remains at 75%, but an additional Upfront Fee is now due. The
additional Upfront Fee due when the loan is increased is $2,747 (Calculations –
Step 1: $705,000 x 0.75 x .0105 = $5,552 (amount due if the entire loan was made at
once). Step 2: $5,552 - $2,805 (the amount paid when the loan was first made) =
$2,747)
b) The additional Upfront Fee associated with the increase must be paid electronically
within 30 days from the date the increase was approved, or the total loan guaranty will be
cancelled.
c) On loans that have been initially disbursed, the Upfront Fee associated with any increase
approved by SBA must be paid to SBA, even if the increase is subsequently cancelled.
Note: This is not a new policy. SBA is re-stating it here in response to questions received.
d) In FY 2023, as in FY 2022, SBA will be unable to approve increases to 7(a) loans that
were approved from December 27, 2020, through September 30, 2021. The Economic
Aid Act provided for higher guaranty percentages and fee reductions for eligible 7(a)
loans as described in Information Notice 5000-20084. These authorities expired on
September 30, 2021; therefore, a request by a borrower for additional funding on a 7(a)
loan approved during the time period when the Economic Aid Act provisions were in
effect must be submitted as a new loan application.
e) The Lender’s Annual Service Fee for a loan is calculated based on the guaranteed portion
of the outstanding balance of the loan in accordance with the fee schedule in effect at the
time the loan was approved. When the loan is increased, the fee is recalculated based on
the revised loan amount.
Example: In FY 2022, a loan was approved for $950,000 and was subject to a
Lender’s Annual Service Fee of 0.49% of the guaranteed portion of the outstanding
balance of the loan, per the fee schedule for FY 2022. In FY 2023, the loan was
increased, and the gross loan approval amount was greater than $1 million. Since the
increase is being made to a loan that was approved in FY 2022 loan, the FY 2022 fees
apply, and the Lender’s Annual Service Fee is increased to 0.55% of the guaranteed
portion of the outstanding balance of the loan, per the FY 2022 fee schedule.
If the loan is sold on the secondary market, the FTA, as paying agent, will make the
corresponding adjustment to the net note rate to the investor to reflect the correct

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Lender’s Annual Service Fee owed, if any, to SBA even if there is a subsequent loan
increase added to the loan sale.
See SOP 50 10 6 Part 2, Section A, Chapter 6 for more information on additional fees for loan
increases.

7. Upfront Fee for SBA Express Loans Made to Veteran-owned Small Businesses:
For all SBA Express loans made to businesses owned and controlled by a veteran or spouse
of a veteran, the Upfront Fee will be $0 in accordance with section 7(a)(31)(G) of the Small
Business Act (15 U.S.C. § 636(a)(31)(G)).

Lenders must document in their loan file the veteran eligibility for fee relief using the
documentation in the Attachment to this Notice and must include a copy of that
documentation with any guaranty purchase request.

There is no additional fee relief available for 7(a) loans approved in FY2023.

Questions:
Questions concerning this Notice may be directed to the Lender Relations Specialist in the local
SBA Field Office.

Dianna L. Seaborn
Director
Office of Financial Assistance

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Attachment to SBA Information Notice 5000-836123
SBA Veteran Qualifications
In order to qualify for the fee relief, set forth in section 7(a)(31)(G) of the Small Business Act, as
discussed in this Notice, businesses must be 51% or more owned and controlled by an individual
or individuals in one or more of the following groups:

• Veterans (other than a veteran who received a Dishonorable or Bad Conduct Discharge);
• Service-Disabled Veterans;
• Active Duty Military service member participating in the military’s Transition Assistance
Program (TAP);
• Reservists and National Guard Members; or
• Current spouse of any Veteran, Active Duty service member, or any Reservist or
National Guard member; or widowed spouse of a service member who died while in
service or of a service-connected disability.

SBA Veteran Documentation Requirements
• Veteran: Copy of Form DD 214, “Certificate of Release or Discharge from Active Duty,”
provided for other than dishonorably discharged veterans.
• Service-Disabled Veteran: Copy of Form DD 214 or documentation from the U.S.
Department of Veterans Affairs (DVA) that the veteran has been determined as having a
service-connected disability.
• Transitioning Active-Duty Military Member: DD Form 2, "U.S. Armed Forces
Identification Card (Active)," or DD Form 2, "Armed Forces of the United States Geneva
Conventions Identification Card (Active)" and DD Form 2648 (Active-Duty Military
member) or DD Form 2648-1 (Reserve Component member).
• Reservists and National Guard: DD Form 2, Armed Forces of the United States
Identification Card (Reserve).
• Current Spouse of Veteran: The veteran’s Form DD 214 and evidence of status as a
current spouse.
• Current Spouse of Transitioning Active Duty Military Member or Current
Reservist/National Guard Member: DD Form 1173, Department of Defense Guard
Reserve Family Member Identification Card, and evidence of status as the current spouse.
• Widow of Active Duty Service Member who died in service or Widowed Spouse of
Veteran who died of a service-connected disability: Documentation from DOD or from
DVA clearly showing this to be the case.

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Acceptable Alternatives
If the veteran’s DD Form 214 is unavailable, an NA Form 13038, “Certification of Military
Service,” is an acceptable equivalent.

For any category listed above that requires a photocopy of a military ID, as an alternative to
photocopying the military ID, the service member may provide a “statement of service” signed
by, or by the direction of, the adjutant, personnel office, or commander of the unit or higher
headquarters to which they are attached. There is no one unique form used by the military for a
statement of service. While statements of service are typically on military letterhead, some may
be computer-generated. The statement of service must clearly show:

1) The Service member’s full name;
2) The Service member’s Social Security Number (SSN) or the last 4 digits of SSN;
3) The entry date on active duty or the entry date of applicant’s Reserve/Guard duty, as
applicable (depending on whether the applicant is on active duty or is a current member
of the Reserves or National Guard);
4) The duration of lost time, if any (for active duty); and
5) The name of the command providing the information.
Note for Current Reserve/Guard Members: The statement must clearly indicate that the applicant
is an “active” reservist and not just in a control group (inactive status).

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