What fees can an SBA lender charge you besides interest?

A closed list

Section 120.221 begins with a restriction: "Unless otherwise allowed by SBA Loan Program Requirements, the Lender may charge and collect from the applicant or Borrower only the following fees and expenses." The word "only" makes the list closed. A charge that does not fit one of the five categories is not authorized by this section. The opening clause, "Unless otherwise allowed by SBA Loan Program Requirements," preserves the possibility that other SBA rules allow other charges, and our guaranty fee page covers a separate charge that other SBA rules set. This page only covers what 120.221 itself allows.

Service and packaging fees

Paragraph (a) lets a lender charge "reasonable fees (customary for similar Lenders in the geographic area where the loan is being made) for packaging and other services." Three protections come with it. The lender must advise the applicant in writing that the applicant is not required to obtain or pay for unwanted services. The applicant is responsible for deciding whether the fees are reasonable. And SBA may review these fees at any time, with the lender required to refund any fee SBA considers unreasonable. Notice there is no dollar or percentage cap in this paragraph. The limit is reasonableness measured against what similar lenders in the area charge. If a fee quote seems high, you can compare it with other lenders and ask what services it covers.

Extraordinary servicing, out-of-pocket costs and legal fees

Paragraph (b) allows a service fee for loans with extraordinary servicing needs: not more than 2 percent per year on the outstanding balance of the part requiring special servicing, and only with prior written SBA approval. It applies to the part of the loan that needs special servicing, not the whole loan if the rest is ordinary. Paragraph (c) allows necessary out-of-pocket expenses "such as filing or recording fees." Paragraph (e) lets the lender charge for legal services "rendered on an hourly basis." The text contains no hourly rate cap, and no definition of necessary beyond the example given.

The late fee

Paragraph (d) says the lender may charge a late payment fee "not to exceed 5 percent of the regular loan payment." The basis is the regular payment, not the outstanding balance and not the amount past due. On a $4,000 regular payment the most the fee can be is $200. Enter a payment in the tool above and it prints the ceiling. The text says nothing about when a payment counts as late, which is set by the note, and says nothing about how many times a fee can be charged. A fee that exceeds the cap would be outside what this section authorizes.

A worked example for extraordinary servicing

A loan is split into a performing portion and a portion with a standby arrangement that needs special handling. The special portion has an outstanding balance of $150,000. The cap is 2 percent per year, which is $3,000 a year, about $250 per month. The lender cannot charge more than that, and cannot charge it at all without prior written approval from SBA. The tool prints both the annual and the monthly equivalent. The monthly figure is simple division for illustration; the regulation speaks of a percentage per year, not how it is collected.

What the section does not say

It does not set a cap for packaging fees, does not address interest rates, and does not mention prepayment. Interest rates and prepayment charges come from other parts of SBA's rules, and our prepayment fee calculator covers one of them separately. It does not say what services a packaging fee must buy. And it does not say that a lender must itemize its charges, although the written notice that services are optional is a requirement. If you believe you were charged something that fits none of the five categories, the lender and SBA are the places to raise it; this page cannot say whether a particular charge is allowed under other SBA rules.

How to check a fee sheet

Take the lender's fee sheet and sort every line into the five buckets: packaging or service, extraordinary servicing, out-of-pocket expense, late fee, or legal. A line that cleanly fits one bucket is within what 120.221 contemplates, subject to that bucket's own limit. A line that fits none is worth a question: what is it for, and which SBA rule allows it? Check each capped line against its cap using the calculator above. And confirm you received the written notice that you do not have to buy services you do not want, because that notice is a requirement on the lender, not a courtesy.

Sources

• 13 CFR § 120.221, Fees and expenses that the Lender may collect from a loan applicant or Borrower. Read November 2, 2026.

Text read: Electronic Code of Federal Regulations, Title 13, Part 120, current through the eCFR issue date 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 an SBA-approved lender or at sba.gov. This page summarizes the regulation and does not replace it.