SBA Loan Fees Up, Guarantees Down Fees for SBA loans went up and the maximum loan guarantee went down Oct. 1. Congress did not act to continue the lower fees and higher guarantees on SBA’s 7(a) loans that were put into place after the terrorist attacks of Sept. 11, 2001. The basic fee for borrowers, the guaranty fee, doubled to 2% on loans of $150,000 or less. Other fees for borrowers and lenders also rose. The fee is levied on the amount that SBA guarantees. The maximum amount the government will guarantee dropped to $1 million from $1.5 million and “piggyback” loans – a combination of a 7(a) loan with other financing – are again prohibited. As part of a continuing resolution to temporarily fund most government programs in the new fiscal year, House Democrats offered an amendment to continue the lower fees and higher guarantees. The Bush administration opposed the amendment and the House voted it down Sept. 29. SBA officials contend the higher fees are too small to be a burden. For instance, the agency says, if the borrower’s fee were financed and rolled into the loan, it would increase the payment by only $10 a month on a 10-year, $100,000 loan. The administration has proposed ending federal funding for the 7(a) program and keeping fees high enough so the program could pay its own way. Both houses of Congress rejected that approach, so the fee increases could be rolled back when a conference committee writes SBA’s 2005 appropriation. Many in Congress disagree. The fee increases could be rolled back when SBA’s 2005 appropriation is passed, probably after the election.