Business Loan Closing Costs: Every Fee You Might See
Complete guide to business loan closing costs including origination fees, SBA guarantee fees, appraisal costs, legal fees, and how to minimize total closing expenses.
Closing costs on business loans can add thousands to your total borrowing expense. Understanding what fees to expect helps you budget accurately and negotiate effectively.
This guide covers every fee you might encounter at closing.
Common Closing Costs Overview
Typical fees on a business loan:
| Fee Type | Typical Range | Paid To |
|---|---|---|
| Origination fee | 0.5-3% of loan | Lender |
| SBA guarantee fee | 0-3.75% of guaranteed portion | SBA |
| Appraisal | $500-$5,000 | Third-party appraiser |
| Environmental review | $500-$3,000 | Third-party firm |
| Title insurance | $500-$2,500 | Title company |
| Legal/closing fees | $1,000-$5,000 | Attorney/title company |
| UCC filing | $50-$200 | Secretary of State |
| Credit report | $25-$100 | Credit bureau |
Origination Fees
The primary lender fee for processing your loan:
- Typical range: 0.5% to 3% of loan amount
- Negotiability: Often negotiable, especially for strong applicants
- When paid: Usually at closing, sometimes rolled into loan
- What it covers: Underwriting, processing, administration
Origination Fee Math
On a $500,000 loan, a 2% origination fee is $10,000. Negotiating from 2% to 1.5% saves $2,500. Always ask for a reduction.
SBA Guarantee Fees
Required on all SBA-backed loans:
| Loan Amount | Guarantee Fee |
|---|---|
| Up to $150,000 | 2% of guaranteed portion |
| $150,001-$700,000 | 3% of guaranteed portion |
| $700,001-$1,000,000 | 3.5% up to $1M portion |
| Over $1,000,000 | 3.75% on portion over $1M |
Appraisal and Valuation Fees
Required when real estate or major equipment is collateral:
- Real estate appraisal: $2,000-$5,000 depending on property complexity
- Equipment appraisal: $500-$2,000 based on equipment type
- Business valuation: $2,000-$10,000 if required for acquisition loans
- Inventory appraisal: $1,000-$3,000 for inventory-secured loans
Environmental Assessments
Often required for real estate transactions:
- Phase I ESA: $1,500-$3,000; desktop review of environmental risk
- Phase II ESA: $3,000-$10,000; actual site testing if Phase I identifies issues
- When required: Commercial real estate, manufacturing properties
- Who pays: Typically borrower, sometimes seller in acquisitions
Title and Legal Fees
Costs for title work and document preparation:
| Service | Typical Cost | When Required |
|---|---|---|
| Title search | $200-$500 | Real estate transactions |
| Title insurance | $500-$2,500 | Real estate transactions |
| Attorney fees | $1,000-$5,000 | Complex or large loans |
| Document preparation | $500-$1,500 | Most loans |
| Recording fees | $50-$300 | Real estate, UCC filings |
Ongoing Fees to Anticipate
Beyond closing, some loans have ongoing costs:
- Annual loan review fee: $250-$500 per year
- SBA annual servicing fee: 0.52% of outstanding balance for 7(a) loans
- Unused line fee: 0.25-0.5% on undrawn line of credit
- Payment processing fee: Some lenders charge for ACH or wire payments
- Late payment fees: Typically 5% of payment or $50 minimum
Read the Fine Print
Ongoing fees are often buried in loan documents. Ask specifically about any recurring fees before signing.
Closing Cost Estimates by Loan Type
Typical total closing costs:
| Loan Type | Typical Closing Costs | Example ($500K Loan) |
|---|---|---|
| Bank term loan (unsecured) | 1-2% of loan | $5,000-$10,000 |
| Bank term loan (secured) | 2-4% of loan | $10,000-$20,000 |
| SBA 7(a) | 3-5% of loan | $15,000-$25,000 |
| SBA 504 | 4-6% of loan | $20,000-$30,000 |
| Online term loan | 0-2% of loan | $0-$10,000 |
| Line of credit | 0.5-1% of line | $2,500-$5,000 |
How to Minimize Closing Costs
Strategies to reduce your closing expenses:
- Negotiate origination fee: Most negotiable item; ask for reduction
- Shop for services: Get quotes from multiple appraisers, attorneys
- Roll costs into loan: Increases balance but preserves cash
- Ask about waivers: Some fees can be waived for existing customers
- Compare lenders: Total cost varies significantly by lender
- Bundle services: Some closing agents offer package discounts
Closing Cost Checklist
Request this breakdown before closing:
- [ ] Origination/processing fee
- [ ] SBA guarantee fee (if SBA loan)
- [ ] Appraisal fees
- [ ] Environmental assessment
- [ ] Title search and insurance
- [ ] Attorney/legal fees
- [ ] Document preparation
- [ ] Recording/filing fees
- [ ] Credit report fee
- [ ] Wire transfer fee
- [ ] Any other lender fees
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Read more →Important Disclosure
Not Financial Advice: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. You should consult with qualified professionals before making any financial decisions.
No Guarantee of Financing: Liminal Lending Co. is a business loan marketplace that connects borrowers with third-party lenders. We are not a lender and do not make credit decisions. Submitting an application does not guarantee approval or funding. Loan terms, rates, and availability vary by lender and are subject to borrower qualifications and lender criteria.
Third-Party Lenders: All loan products are offered by independent third-party lenders. Liminal Lending Co. is an Independent Sales Organization (ISO) and receives compensation from lenders for successful referrals. Terms and conditions of any loan are between you and the lender.
Rate Information: Rates, terms, and fees mentioned in this article are estimates based on publicly available information and may not reflect current market conditions or specific lender offers. Actual rates depend on creditworthiness, business financials, and lender policies.
Information May Change: Financial markets, lending regulations, and economic conditions are subject to rapid change. While we strive to keep our content accurate and up-to-date, information in this article may become outdated. Always verify current rates, terms, program availability, and regulatory requirements with lenders and official sources before making financial decisions.