SBA loan terms and fees: 7(a) and 504 (2026)
SBA loan terms and fees under SOP 50 10 8.1: maximum maturities by use, the SBA guaranty fee, what lenders may and may not charge, and prepayment fees.
Published · 8 min read · By the AceTheSBA team
Key points
- 7(a) terms follow the use of the money: up to 10 years for working capital, inventory and goodwill, generally 10 years for equipment (up to 15 if its useful life supports it), and up to 25 years for real estate.
- SBA charges an upfront guaranty fee on the guaranteed portion: up to 2% on loans of $150,000 or less, 3% from $150,001 to $700,000, and 3.5% to 3.75% on larger loans. It can be paid from loan proceeds.
- Lenders may charge limited packaging fees and closing costs, but not commitment, origination, broker or referral fees, points or prepayment fees.
- 7(a) loans of 15 years or more carry a prepayment fee only if you prepay more than 25% in one of the first 3 years: 5%, 3% and 1%.
The term of an SBA loan and the fees attached to it decide your monthly payment and the true cost of the loan as much as the interest rate does. Both are set by SBA’s rulebook, SOP 50 10 8.1, which makes them easier to check than most loan terms.
7(a) loan terms (maturities)
SBA requires the shortest appropriate term for what the money buys. The maximums are:
| What the loan pays for | Maximum term |
|---|---|
| Working capital, inventory, goodwill and other intangibles | 10 years |
| Equipment, fixtures and furniture | Generally 10 years; up to 15 if the IRS useful life supports it |
| Leasehold improvements | 10 years |
| Real estate | 25 years, plus time to complete construction or renovation |
When a loan pays for several things, the term is usually a weighted average of the uses. A loan with 51% or more for real estate can run up to 25 years. Business purchases follow their own rules: only the real estate portion of a change of ownership can stretch beyond 10 years.
Terms on other programs
- 504 loans: the CDC portion runs 10, 20 or 25 years at a fixed rate
- SBA Express: the same as 7(a) term loans; revolving lines can run up to 10 years
- Microloans: up to 7 years
- Disaster loans: up to 30 years
A longer term lowers the monthly payment, which helps your debt service coverage, but you pay more interest overall.
The SBA guaranty fee
SBA charges a one-time upfront guaranty fee on the guaranteed portion of 7(a) loans with a maturity over 12 months. The lender pays it and may pass it to you, and you may pay it from the loan proceeds.
| Loan amount | Maximum upfront fee |
|---|---|
| $150,000 or less | 2% of the guaranteed portion |
| $150,001 to $700,000 | 3% of the guaranteed portion |
| $700,001 to $5,000,000 | 3.5% of the guaranteed portion up to $1 million, plus 3.75% above $1 million |
Example: a $500,000 loan with a 75% guarantee has a $375,000 guaranteed portion, so the maximum fee is 3% of that, or $11,250. On a $1,000,000 loan the guaranteed portion is $750,000 and the maximum fee is $26,250.
SBA can lower fees for a fiscal year by notice, and SBA Express fees are waived for eligible veteran-owned businesses, so ask your lender for the fee that applies on your approval date.
What a 7(a) lender may charge
- Packaging fees: a flat fee up to $2,500 without documentation. Above that, the lender itemizes the work on SBA Form 159, and a percentage fee can be no more than 5% for loans of $150,000 or less or 3% above that, capped at $30,000.
- Closing costs: itemized out-of-pocket costs such as appraisals, title, filing and environmental reports
- Legal fees: charged hourly
- Late fees: up to 5% of the payment once it is more than 10 days late
What a 7(a) lender may not charge
- Commitment, origination, broker, referral or renewal fees
- Points or add-on interest
- Prepayment fees of its own
- Any requirement that you buy other services, such as insurance or accounts, as a condition of the loan
If a term sheet includes one of these, ask the lender to explain it in writing.
Prepaying an SBA loan
Most SBA loans can be paid off early at no cost. The exception is a 7(a) loan with a maturity of 15 years or more. If you voluntarily prepay more than 25% of the loan in one of the first three years, SBA charges a subsidy recoupment fee:
- 5% of the prepayment in year 1
- 3% in year 2
- 1% in year 3
On a 25-year real estate loan of $1,000,000, prepaying $300,000 in year 1 would cost $15,000. Prepaying 25% or less in any one of those years costs nothing. 504 loans work differently: prepaying the CDC portion carries a prepayment fee (a repurchase premium) set out in the debenture’s prepayment schedule, so ask your CDC for it before you sign.
504 fees
504 loans carry fees of about 3% of the CDC portion, which are usually financed into the loan. The bank portion has its own fees, agreed with the bank.
How to compare offers
Put every offer on the same footing: rate, term, upfront fee, packaging fee, closing costs and any prepayment terms. A lower rate with higher fees can cost more than a slightly higher rate with lower fees, especially if you expect to repay early.
This article reflects SBA SOP 50 10 8.1, effective October 1, 2026. Fees are SBA maximums; your approval states the fees that apply.