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. Three fees carry three names, and the difference is who is paid. An origination fee is the lender's own charge for making the loan; a loan broker's fee goes to the intermediary who placed your file with that lender; the packaging fee is for assembling the application itself. On an SBA loan what an agent or broker is paid for the loan 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.