SBA rules · SOP 50 10 8.1
What are the fees on an SBA 504 loan?
Allowable SBA 504 loan fees comprise upfront application deposits, debenture-financed administrative fees, monthly and annual ongoing servicing fees, and a 0.50% Third Party Lender participation fee.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Application deposit and financed debenture fees: The CDC may collect a borrower deposit at application of $2,500 or 1% of net debenture proceeds, whichever is less. The gross debenture finances administrative costs including the CDC processing fee (up to 1.5% of net debenture), closing fee (maximum of $10,000), SBA guaranty fee (0.5%), funding fee (0.25%), and underwriter fee (0.4% for 20- and 25-year debentures, or 0.375% for 10-year debentures), though only the CDC processing fee and closing costs may optionally be paid upfront and removed from debenture calculations.
- Ongoing borrower fees: Ongoing charges paid by the borrower include a monthly CDC servicing fee of 0.625% to 2% per year (capped without prior SBA approval at 1.5% in rural areas and 1% elsewhere), an ongoing SBA annual fee adjusted by cohort year based on the unpaid principal balance, an ongoing CSA fee, and a supplemental fee for debt refinancing without expansion.
- Third Party Lender and referral fees: If the Third Party Lender holds a senior lien position, a one-time participation fee of 0.50% of the senior mortgage loan applies, which may be paid by the Third Party Lender, CDC, or borrower. This participation fee must be withheld from the CDC processing fee. A CDC may also earn a referral fee from a Third Party Lender for locating financing, provided it is paid under a contract and not funded by the borrower or debenture proceeds.
- CDC ongoing SBA fee and ancillary fees: The CDC must pay an annual ongoing fee to SBA of 0.125% of the outstanding debenture balance from its servicing fees, which cannot be passed on to the borrower. Additional permitted fees include late payment fees of 5% or $100 (whichever is greater) for payments received after the 15th of the month, an assumption fee up to 1% upon SBA approval, and a repurchase premium upon voluntary prepayment.
The source
What the SOP says
“At the time of application, the CDC may require a deposit from the Borrower of $2,500 or 1% of the Net Debenture Proceeds, whichever is less.
“Maximum of $10,000 may be financed from the debenture proceeds.
“Minimum of 0.625%/year. Maximum of 2%/year Note: Maximum 1.5% for rural areas and 1% for everywhere else without prior SBA approval.
“Upfront fee of 0.4%
“Upfront fee of 0.375%
“A one-time fee from the Third Party Lender if in a senior lien position to SBA in the project. The fee may be paid by the Third Party Lender, CDC, or Borrower.
“The fee must be paid from the servicing fees collected by the CDC and cannot be paid from any additional fees imposed on the Borrowers (loans approved by SBA after 9/30/1996).
“0.25% of the net Debenture Proceeds
“Not paid by the Borrower or funded from the debenture proceeds.
“The CDC’s Processing Fee and the closing costs are the only fees that can be paid upfront and deleted from the Gross Debenture calculations.
“Loan payments received after the 15th of each month may be subject to a late payment fee of 5% of the late payment or $100, whichever is greater.
“Not to exceed 1% of the outstanding principal balance of the loan being assumed.
“The Borrower may prepay its 504 loan. The repurchase price of the Debenture shall be an amount equal to the outstanding principal balance of the Debenture, plus interest accrued and unpaid thereon to the repurchase date, plus a prepayment fee, known as a repurchase premium (“RP”).
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.