Packaging fee

Definition

What a lender charges to assemble and submit your SBA loan file.

Why It Matters

It is a real cost at closing and it is not the guaranty fee, which goes to the government. The packaging fee goes to the lender or to the third party that prepares the application, it is commonly financed into the loan rather than paid in cash, and it varies enough between lenders to be worth asking about early. A lender that quotes a rate without quoting its fees has quoted half a price, so put it beside the rate on every term sheet you compare. On an SBA loan the rulebook decides most of the names. The lender may not charge an origination fee, points, a broker or referral fee, or a prepayment fee of its own. Its packaging fee is a flat $2,500 with no documentation, or above that a share of the loan of at most 3% over $150,000 and $30,000 in all. A loan broker you hire has a lower scale of its own: on any loan above $50,000 it may take 2% of the first $1,000,000 and 0.25% of the rest, within the same $30,000 ceiling. It may not charge you a standard flat fee or one owed only if the loan closes. Every fee above $2,500 is disclosed on the program's own fee disclosure form, which is the document to ask for when the names blur.

In numbers: A packaging fee of $2,500 on a $1M loan is a quarter of a point, small next to the rate but large next to the difference between two lenders' rates.