What fees can an SBA 504 borrower be charged?

Who charges what

A 504 loan involves more parties than an ordinary bank loan, and each one can charge. The Certified Development Company (CDC) that packages the loan, the Central Servicing Agent (CSA) that collects payments, SBA itself, and the trustee and fiscal agents involved in selling the Debenture all appear in 13 CFR 120.971. The section is useful because it is a list of ceilings. A fee that is not on the list, or that exceeds the ceiling printed there, is a reason to ask questions.

The calculator above takes your Debenture figures and returns the highest amount each percentage fee can reach. It reports ceilings, not quotes. A CDC can charge less than the maximum for most items, and the actual closing fee is described only as "reasonable."

CDC fees in detail

The processing fee is limited to 1.5 percent of the net Debenture proceeds. Two-thirds of the fee is considered earned and can be collected by the CDC when SBA issues the loan number; the portion paid by the Borrower may be reimbursed from the Debenture proceeds. On $3,000,000 of net proceeds the ceiling is $45,000, of which about $30,000 can be collected at loan number.

The CDC closing fee is not a percentage. The CDC may charge a reasonable fee sufficient to reimburse the expenses of its in-house or outside legal counsel and other miscellaneous closing costs. Some closing costs can be funded from the Debenture proceeds, and 120.883 caps the amount of the CDC closing fee that may be financed at $10,000.

The servicing fee is a monthly fee of at least 0.625 percent per annum and no more than 2 percent per annum of the unpaid balance, determined at five-year anniversary intervals. A servicing fee greater than 1.5 percent in a rural area, or 1 percent everywhere else, requires SBA's prior written approval based on evidence of substantial need. It may be paid only from loan payments received.

Late fees apply to payments received after the 15th of the month: 5 percent of the late payment or $100, whichever is greater. On a $10,000 payment that is $500; on a $1,500 payment, 5 percent is only $75, so the $100 floor applies. And if a loan is assumed by another party, the CDC may, with SBA's written approval, charge an assumption fee not exceeding 1 percent of the outstanding principal balance being assumed.

SBA and other agent fees

SBA charges two fees. A 0.5 percent guarantee fee is charged on the Debenture. For loans approved after September 30, 1996, SBA also charges an annual fee of not more than 0.9375 percent on the unpaid principal balance, determined at five-year anniversary intervals. On a $3,000,000 balance that is up to $28,125 a year, about $2,344 a month.

The CSA may charge an initiation fee on each loan and a monthly servicing fee under its Master Servicing Agreement. Other agent fees needed to market and service Debentures and Certificates may be assessed to the Borrower or the investor, but they must be approved by SBA and published periodically in the Federal Register. The regulation does not print a figure for these, so this page cannot.

A funding fee not to exceed 0.25 percent of the Debenture may be charged to cover costs incurred by the trustee, fiscal agent and transfer agent. On a $3,000,000 Debenture the ceiling is $7,500.

Paying fees from the loan, and the application deposit

Not every fee has to come out of pocket. Under 120.883, several administrative costs are not part of Project costs but may be paid with the proceeds of the 504 loan and the Debenture: the SBA guarantee fee, the funding fee, the CDC processing fee, the Borrower's out-of-pocket closing costs other than legal fees, the CDC closing fee up to $10,000, and the underwriters' fee. Financing them raises your loan amount, which is why 120.930 allows 100 percent of eligible administrative costs on top of the 40 percent.

At the time of application the CDC may also require a deposit of $2,500 or 1 percent of the net Debenture proceeds, whichever is less (120.935). If the application is accepted the deposit may be applied to the processing fee; if it is denied the deposit must be refunded; if you withdraw, the CDC may deduct reasonable packaging and processing costs.

Using the numbers

Add up the ceilings to estimate the worst case, then compare with the CDC's fee schedule. If a line item is higher than the ceiling here, ask which paragraph of 120.971 authorizes it. If it is lower, good: the regulation sets maximums. The percentages are applied to specific bases (net proceeds, Debenture, unpaid balance), so check which base your quote used before comparing.

Sources

• 13 CFR § 120.971, Allowable fees paid by Borrower. Read November 2, 2026.
• 13 CFR § 120.883, Eligible administrative costs for 504 loans. Read November 2, 2026.
• 13 CFR § 120.935, Deposit from the Borrower that a CDC may require. Read November 2, 2026.

Text read: Electronic Code of Federal Regulations, Title 13, Part 120, in the eCFR, current as of October 29, 2026. Dollar figures and percentages on this page are the ones printed in those sections as of that date; SBA can amend the rule and publishes loan-program procedures (such as SOP 50 10) that add detail this page does not cover. Confirm current terms with a Certified Development Company, an SBA-approved lender or at sba.gov. This page summarizes the regulation and does not replace it.