SBA 504 Loan Fees: What You Need to Know
A wide range of fees are charged in the 504 loan process. However, all of these fees are rolled into the loan in order to limit your upfront cash contribution requirements. The most common fees that you will be charged include the following:
SBA Guarantee Fee: 0.5% of the loan's total value
Funding Fee: 0.25% of the loan's total
CDC Processing Fee: 1.5% of the loans total
Closing Costs: Variable depending on loan amount
Underwriting Fee: variable depending on loan amount
Servicing Fees: Fees charged by the loan servicer over time, reducing in five-year increments.
Prepayment Premiums: Penalties for paying off your loan early, reducing over time (only due if you pay off the loan early).
Lender Participation Fee: A one-time fee charged to your conventional lender, equal to 0.5% of the first lien.
Additional Fees: A number of other fees may be charged during this process, including recording fees, closing fees assessed by the title company, title insurance fees, attorney's fees, and more.
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What are the closing costs associated with an SBA 504 loan?
Closing costs associated with an SBA 504 loan are variable depending on the loan amount. According to Commercial Real Estate Loans, these costs may account for 2% to 3% of the loan amount and may include things like property closing costs and attorney's fees. Additionally, according to SBA 504 Loans, other fees may be charged during this process, including recording fees, closing fees assessed by the title company, title insurance fees, attorney's fees, and more.
What are the fees for an SBA 504 loan?
The most common fees that you will be charged for an SBA 504 loan include the following:
- Fee Amount
- SBA Guarantee Fee 0.5% of the loan's total value
- Funding Fee 0.25% of the loan's total
- CDC Processing Fee 1.5% of the loans total
- Closing Costs Variable depending on loan amount
- Underwriting Fee variable depending on loan amount
- Servicing Fees Fees charged by the loan servicer over time, reducing in five-year increments.
- Prepayment Premiums Penalties for paying off your loan early, reducing over time (only due if you pay off the loan early).
- Lender Participation Fee A one-time fee charged to your conventional lender, equal to 0.5% of the first lien.
- Additional Fees A number of other fees may be charged during this process, including recording fees, closing fees assessed by the title company, title insurance fees, attorney's fees, and more.
In addition, there is a packaging fee of $2,500 that should be paid once the loan has been submitted to the proper authorities. This fee will be returned to the prospective borrower if the loan application is denied, or refunded once the application is approved and the debenture has been funded. However, this packaging fee will be forfeited if the loan application is withdrawn before a decision is made.
How much does an SBA 504 loan cost?
The cost of an SBA 504 loan depends on the current Treasury bond rate, the guarantee fee paid by the lender to the SBA, the servicing fee that the lender will pay to the CDC, and the fee to the central servicing agent. Your interest rate will be the sum of those fees, plus the bond rate that applies to your loan. One-time fees are financed into the loan: an upfront SBA guaranty fee of 0.5% of the net debenture and a lender participation fee of 0.5% of the bank's first-lien amount (both waived for manufacturers in FY2026), plus third-party closing costs. (Source: Eagle Compliance FY2026 fee chart.)
For more information, please visit https://www.sba504.loans/rates-and-costs.
What are the interest rates for an SBA 504 loan?
The interest rate for an SBA 504 loan is based on the 10-year or 20-year Treasury bond rate, plus a guarantee fee paid by the lender to the SBA, a servicing fee paid to the CDC, and a fee to the central servicing agent. The interest rate will be the sum of these fees, plus the bond rate that applies to the loan. The 20- and 25-year debentures price at a spread above the 10-year U.S. Treasury; 10-year debentures price off a shorter-term Treasury benchmark.
You can find the current Treasury bond rate here. One-time fees are financed into the loan: an upfront SBA guaranty fee of 0.5% of the net debenture and a lender participation fee of 0.5% of the bank's first-lien amount (both waived for manufacturers in FY2026), plus third-party closing costs. (Source: Eagle Compliance FY2026 fee chart.)
What are the eligibility requirements for an SBA 504 loan?
In order to take out an SBA 504 loan, your business must meet the following eligibility requirements:
- Your business must be a for-profit organization.
- Your business must meet current SBA size standards.
- Your business must have a tangible net worth under $20 million.
- Your business cannot earn 1/3 or more of its income from packaging SBA loans.
- Your business must have an average net income under $6.5 million after federal income taxes for the two years preceding your application.
- Your business cannot be engaged in any sort of passive or speculative activities.
Note that additional requirements may be placed by CDCs or conventional lenders. You can find a full list of eligibility requirements and other important information with the SBA here.
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