My Florida Business Broker

Breaking News: SBA Slashes Up Front Loan Fees

Now until 2023 may be the time to sell your business.

In a move that was not previously announced, the SBA has issued a notice slashing lender service fees and loan “up front” fees through fiscal year (FY) 2023. The new fees are effective for all 7(a) loans approved on October 1, 2022, through and including September 30, 2023. All loan amounts are based on the gross loan approval amount, including the SBA-guaranteed and unguaranteed portions.

Each year SBA reviews certain fees payable to SBA by 7(a) lenders and borrowers to determine the appropriate fees to manage the estimated costs of the 7(a) loan program. The changes for the coming year are as follows:

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.

Upfront Fees, except for Export Working Capital Program (EWCP) loans and SBA Express loans made to veteran-owned businesses, based on gross loan approval amount, will be:

  • For loans with a maturity that exceeds 12 months, the Upfront Fees are: 
    • For loans of $500,000 or less: 0.00%: 
    • For loans of $500,001 to $700,000: 0.55% of the guaranteed portion. 
    • For loans of $700,001 to $1,000,000: 1.05% of the guaranteed portion. 
    • 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. 
  • For loans with a maturity of 12 months or less, the Upfront Fees are: 
    • For loans of $500,000 or less: 0.00%. 
    • For loans $500,001 and greater: 0.25% of the guaranteed portion

The cost savings for borrowers can be significant. A $400,000 loan obtained under the current FY22 rate is subject to a ~2.77% up front fee. Assuming the borrower put down 25% as a down payment on the full amount, the up front fee was $8,310 ($400,000 x 0.75 x 0.0277.)

The same loan taken out October 1 of this year would have zero due in up front fees.

Loans that extend into FY 23 or are increased in FY 23 are subject to the fee schedule based on the rules in effect at the time the loan was originally approved. 

Loans made to veteran or military spouse-owned companies are not subject to up front fees. 

What this means for you is that this might be the time to sell. The reduced fees mean that buyers will have extra cash to put into a deal, and the cost savings may bring more buyers into the market this coming year. If you’ve been thinking about selling your business, we suggest you take advantage of the one economic indicator that’s trending in the right direction for lenders and buyers. Interest rates may be rising steadily, but the SBA fee reduction may offset some of that burden and make this year a banner one for sellers and buyers. 

For more details, contact our office at (904) 254-7846 or email [email protected] 

Bianca Evans

Bianca Evans is an experienced business broker based in Jacksonville, Florida. She is a top producer in her field and has made over 190 transactions since 2006. She is a Certified Business Intermediary (CBI), a Certified M&A Professional (CM & AP), a Board Certified Intermediary (BCI), and has her B.S. degree from the University of Florida.

In her 16 years of experience, she has sold businesses in manufacturing, wholesale/distribution, service, retail, restaurants, professional offices, and more.

She has earned the prestigious million-dollar-plus award among her many accomplishments for 15 consecutive years. She has sold the most (dollars) in North Florida for the past three years. 

As part of her process to list a business for sale, she offers free business valuations.

She maintains her professional networks by participating in the International Business Brokers Association (IBBA) and the Business Brokers of Florida (BBF).

One interesting fact about Bianca is that she used to be a business owner herself! She has been on both sides of the transaction when she purchased and later sold that same business. She finds that perspective invaluable when relating to her clients and balancing the many details and emotions.

She is licensed in Georgia and Florida and speaks fluent German.

To reach Bianca, email: [email protected] or visit her website