SBA rules · SOP 50 10 8.1
What is SBA Form 159?
SBA Form 159 (Fee Disclosure Form and Compensation Agreement) is a disclosure and compensation agreement required whenever an Agent represents or assists an Applicant or Lender in connection with an SBA loan, or when a 7(a) Lender charges packaging fees exceeding $2,500.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Purpose and definition: SBA Form 159 is the compensation agreement required under 13 CFR § 103.5 and Section 13 of the Small Business Act to govern and disclose compensation charged for services rendered to an Applicant or Lender in matters involving SBA assistance.
- When required for Agents: It is required for any Agent (such as a packager, broker, consultant, or referral agent) paid by either the Applicant, Lender, or CDC, unless the Agent is operating under an SBA-reviewed LSP Agreement or an SBA-approved CDC professional services contract.
- When required for Lenders: For 7(a) loans, the Lender may charge a flat packaging fee of up to $2,500 without documenting the service, but for packaging fee amounts in excess of $2,500, the Lender must complete SBA Form 159.
- Separate forms and itemization: Separate Forms 159 are required for each Agent providing services, and whenever the aggregate compensation for all fees provided by the same Agent exceeds $2,500, an itemization of the compensation and supporting documentation must be attached.
- Exemptions: Form 159 is not required for LSPs performing services under an SBA-reviewed LSP agreement, CDC contractors under an SBA-approved professional services contract, closing attorneys, state-certified or licensed appraisers, environmental professionals, qualified independent business valuation sources, real estate agents receiving standard sales commissions, or the Applicant's accountant preparing financial statements in the normal course of business.
The source
What the SOP says
“SBA regulations at 13 CFR § 103.5 require the Applicant, 7(a) Lender, and any Agent to execute and provide to SBA a compensation agreement (“Agreement”). Each Agreement governs the compensation charged for services rendered or to be rendered to the Applicant or 7(a) Lender in any matter involving SBA assistance.
“For fee amounts in excess of $2,500, the Lender must complete an SBA Form 159 in accordance with Paragraph D.8., Disclosure of Fees – SBA Form 159, in this Chapter.
“For Agents not covered by an SBA-reviewed LSP Agreement, whether paid by the Applicant or the Lender, SBA Form 159 must be completed and signed by the Applicant, the Agent, and the Lender.
“Separate SBA Forms 159 are required for each Agent who provides services to the Applicant.
“If the aggregate compensation for all fees provided by the same Agent exceeds $2,500, an itemization of the compensation received and supporting documentation must be attached to the Form 159.
“For individuals or entities operating under a professional services contract with a CDC, SBA approves the written agreement or contract with the CDC and the SBA Form 159 is not required.
“For Agents other than professional services contractors performing duties for the CDC under an SBA-approved professional services contract, if the Agent is paid by an Applicant or CDC, an SBA Form 159 must be completed in accordance with form instructions and signed by the Applicant, the Agent, and the CDC.
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Related reading
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.