[Code of Federal Regulations]
[Title 13, Volume 1]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 13CFR120.220]

[Page 230-231]
 
                TITLE 13--BUSINESS CREDIT AND ASSISTANCE
 
                CHAPTER I--SMALL BUSINESS ADMINISTRATION
 
PART 120_BUSINESS LOANS--Table of Contents
 
                Subpart B_Policies Specific to 7(a) Loans
 
Sec.  120.220  Fees that Lender pays SBA.

    A Lender must pay a guaranty fee to SBA for each loan it makes. If 
the guarantee fee is not paid, SBA may terminate the guarantee. 
Acceptance of the guaranty fee by SBA does not waive any right of SBA 
arising from a Lender's negligence, misconduct or violation of any 
provision of these regulations, the guaranty agreement, or the loan 
authorization.
    (a) Amount of guaranty fee--(1) In general. Except to the extent 
paragraph (a)(2) of this section applies, for a loan with a maturity of 
twelve (12) months or less, the guarantee fee which the Lender must pay 
to SBA is one-quarter (\1/4\) of one percent of the guaranteed portion 
of the loan. For a loan with a maturity of more than twelve (12) months, 
the guarantee fee is:
    (i) 2 percent of the guaranteed portion of a loan if the total 
amount of the loan is not more than $150,000,
    (ii) 3 percent of the guaranteed portion of a loan if the total 
amount is more than $150,000 but not more than $700,000, and
    (iii) 3.5 percent of the guaranteed portion of a loan if the total 
loan amount is more than $700,000.
    (2) For loans approved October 1, 2002, through September 30, 2004. 
For a loan with a maturity of twelve (12) months or less, the guarantee 
fee which the Lender must pay to SBA is one-quarter (\1/4\) of one 
percent of the guaranteed portion of the loan. For a loan with a 
maturity of more than twelve (12) months, the guarantee fee is:
    (i) 1 percent of the guaranteed portion of the loan if the total 
loan amount is not more than $150,000,
    (ii) 2.5 percent of the guaranteed portion of a loan if the total 
loan amount is more than $150,000, but not more than $700,000, and
    (iii) 3.5 percent of the guaranteed portion if the total loan amount 
is more than $700,000.
    (b) When the guaranty fee is payable. For a loan with a maturity of 
twelve (12) months or less, the Lender must pay the guaranty fee to SBA 
with its application for a guaranty. The Lender may charge the Borrower 
for the fee when the loan is approved by SBA. For a loan with a maturity 
in excess of twelve (12) months, the Lender must pay the guaranty fee to 
SBA within 90 days after SBA gives its loan approval. The Lender may 
charge the Borrower the fee after the Lender has made the first 
disbursement of the loan. The Borrower may use the loan proceeds to pay 
the guaranty fee. However, the first disbursement must not be made 
solely or primarily to pay the guaranty fee.

[[Page 231]]

    (c) Refund of guaranty fee. For a loan with a maturity of twelve 
(12) months or less, SBA will refund the guaranty fee if the loan 
application is withdrawn prior to approval by SBA; if SBA declines to 
guarantee the loan; or if SBA substantially changes the Lender's loan 
terms and then approves the loan, but SBA's modified terms are 
unacceptable to the Lender. In the latter case, the Lender must request 
a refund in writing within 30 calendar days of SBA's approval. For a 
loan with a maturity of more than twelve (12) months, SBA will refund 
the guaranty fee if the Lender has not made any disbursement and the 
lender requests in writing the refund and cancellation of the SBA 
guaranty.
    (d) Lender's retention of portion of guaranty fee. With respect to a 
loan with a maturity of more than twelve (12) months, where the total 
loan amount is no more than $150,000 Lender may retain not more than 25 
percent of the guaranty fee.
    (e) If the guarantee fee is not paid, SBA may terminate the 
guarantee. The Borrower may use working capital loan proceeds to 
reimburse the Lender for the guarantee fee. Acceptance of the guarantee 
fee by SBA shall not waive any right of SBA arising from the Lender's 
misconduct or violation of any provision of this part, the guarantee 
agreement, the Authorization, or other loan documents.
    (f) Lender's annual service fee payable to SBA--(1) In general. 
Except to the extent paragraph (f)(2) of this section applies, the 
lender shall pay SBA an annual service fee equal to 0.5 percent of the 
outstanding balance of the guaranteed portion of each loan. The service 
fee cannot be charged to the Borrower. SBA may institute a late fee 
charge for delinquent payments of the annual service fee to cover 
administrative costs associated with collecting delinquent fees.
    (2) For loans approved from October 1, 2002, through September 30, 
2004. The lender shall pay SBA an annual service fee equal to 0.25 
percent of the outstanding balance of the guaranteed portion of each 
loan. The service fee cannot be charged to the Borrower. SBA may 
institute a late fee charge for delinquent payments of the annual 
service fee to cover administrative costs associated with collecting 
delinquent fees.

[61 FR 3235, Jan. 31, 1996; 61 FR 11471, Mar. 20, 1996, as amended at 68 
FR 51680, Aug. 28, 2003; 68 FR 56554, Oct. 1, 2003]