The most common fees on business loans besides interest are origination fees, packaging or underwriting fees, closing costs such as filing, appraisal and legal charges, late fees and prepayment penalties. The upfront ones push your annual percentage rate (APR) above the stated interest rate because you pay interest on money you never receive, while a prepayment penalty only bites if you pay off early. Below, we work the payment, APR and refinance math on a $100,000 term loan and set out the SBA 7(a) fee rules in force since October 1, 2026.
What fees do business loans charge besides interest?
Business loan fees besides interest fall into three groups: what you pay to open the loan, what you pay to keep it, and what you pay only if you pay late or early. Names vary by lender, so judge each fee by what it pays for and when it's due.
| Fee | What it covers | When you pay | In the APR? |
|---|---|---|---|
| Origination fee | Making the loan, often a percentage of it | At closing, often deducted from the funds | Yes |
| Packaging or underwriting fee | Preparing and reviewing the application | At closing | Yes |
| Closing costs | Filing, lien searches, appraisals, legal work | At closing | If lender-required; government filing fees may be excluded |
| Broker fee | A third party who placed the loan | At closing | If the lender requires the broker or keeps part of the fee |
| Servicing fee | Ongoing account administration | Monthly or yearly | Yes |
| Late fee | A missed due date | Only if you pay late | No |
| Prepayment penalty | Paying off before the scheduled end | Only if you pay early | No |
The last column follows the finance charge definition in Regulation Z, 12 CFR 1026.4 (eCFR, current as of October 29, 2026). It counts "points, loan fees, assumption fees, finder's fees, and similar charges" and "appraisal, investigation, and credit report fees," and it excludes charges for "actual unanticipated late payment." A prepayment penalty stays out for another reason: the APR assumes every payment is made on schedule to the end of the term.
SBA 7(a) loan fees: what the SOP allows and what it bars
SBA sets 7(a) fee rules in SOP 50 10 8.1, effective October 1, 2026, which says "any fee not expressly permitted in 13 CFR § 120.221 is prohibited."
- Upfront guaranty fee. The lender pays it to SBA and "is permitted to pass the cost of the Upfront Fee to the Borrower." For maturities over 12 months, the SOP's maximum is 2% of the guaranteed portion on loans of $150,000 or less and 3% from $150,001 to $700,000, with higher tiers above that. SBA may announce temporary changes for a fiscal year, so confirm this year's figure. The SOP's own example: a $100,000 loan with an 85% guaranty carries 2% of $85,000, or $1,700.
- Packaging fee. A lender may charge a flat fee of up to $2,500 per loan without documenting the service. A percentage fee can't exceed the lesser of the lender's charge on similar non-SBA loans or 5% for loans of $150,000 or less, 3% above that, with a $30,000 ceiling.
- Out-of-pocket expenses. Itemized filing or recording fees, collateral appraisals, environmental reports and other direct closing charges. Legal work must be billed hourly.
- Late fee. No more than 5% of the regular payment, and only when you're more than 10 days delinquent.
- Barred. Commitment, bonus, origination, broker, commission, referral or similar fees, points or add-on interest, prepayment fees and renewal fees. The lender's annual service fee to SBA "cannot be charged to the Borrower."
- Subsidy recoupment fee. On loans with a maturity of 15 years or longer, voluntarily prepaying more than 25% in any one of the first three years triggers a fee to SBA of 5%, 3% or 1% of the prepayment, by year.
SBA 504 loans follow a separate fee table, so these limits don't carry over. Our guides to SBA loan fees and the guaranty fee and the SBA 7(a) prepayment penalty go deeper.
How fees turn a business loan's interest rate into APR and total cost
The monthly payment on a fixed-rate, fully amortizing loan is:
Payment = P × r ÷ (1 − (1 + r) to the power of −n)
P is the amount borrowed, r is the annual rate divided by 12, and n is the number of monthly payments. The total cost of borrowing is the payment times n, minus P, plus every fee. The APR is the monthly rate at which the payments, discounted back to closing, equal the cash you received after fees, multiplied by 12, the method Appendix J to Regulation Z describes as the "unit-period rate" multiplied "by the number of unit-periods in a year."
Our assumptions, all illustrative: a $100,000 term loan at a fixed 10% for 60 months, a 3% origination fee ($3,000) and $500 of documentation and filing fees, both deducted from the funds at closing.
| Line | Amount |
|---|---|
| Monthly payment | $2,124.70 |
| Total of 60 payments | $127,482 |
| Interest | $27,482 |
| Fees besides interest | $3,500 |
| Total cost of borrowing | $30,982 |
| Cash you receive | $96,500 |
| APR | 11.55% |
The payment is set on the full $100,000, so the fees don't change it. You repay $100,000 plus interest while holding $96,500, and that gap lifts the APR by 1.55 points.
Term matters too. With the same $3,500 of fees and the same 10% rate:
| Term | Monthly payment | Interest | APR |
|---|---|---|---|
| 24 months | $4,614.49 | $10,748 | 13.59% |
| 36 months | $3,226.72 | $16,162 | 12.47% |
| 60 months | $2,124.70 | $27,482 | 11.55% |
| 120 months | $1,321.51 | $58,581 | 10.86% |
A fixed fee costs the most on a short loan because it's spread over fewer months, so a short offer with a modest fee can out-cost a longer loan with a higher stated rate. Longer terms pile up more interest, so weigh APR and total cost together.
What paying off early costs, and when refinancing pays
Upfront fees are spent the day you close, so an early payoff raises your effective cost even without a penalty. Now add an assumed prepayment penalty of 2% of the balance during the first three years.
After 24 payments, the balance is $65,847 and the penalty is $1,317. Paying off then means you've paid $16,840 of interest, $3,500 of fees and the $1,317 penalty, or $21,657 in all. Over those 24 months, that's an APR of 13.03%, and it would still be 12.34% with no penalty, because the $3,500 was spread over two years instead of five.
Now suppose a lender offers to refinance the $65,847 over the remaining 36 months. Keeping the old loan costs 36 more payments of $2,124.70, or $76,489. We assume you pay the penalty and any new fee in cash.
| New offer | New payment | 36 payments | Switching costs | Result vs keeping |
|---|---|---|---|---|
| 8%, 2% new-loan fee | $2,063.41 | $74,283 | $2,634 | $427 worse |
| 7%, 2% new-loan fee | $2,033.17 | $73,194 | $2,634 | $661 better |
| 8%, no new-loan fee | $2,063.41 | $74,283 | $1,317 | $890 better |
The cut to 8% saves $61 a month, so $2,634 of switching costs takes 43 months to earn back, longer than the 36 left. At 7% it takes 29 months, and at 8% with no new fee, 22. For any refinance, divide switching costs by the monthly saving to get the break-even month; if it falls after your last payment, keep the loan.
What lenders must disclose: Regulation Z and state commercial financing laws
Regulation Z, the CFPB's Truth in Lending rule, exempts "an extension of credit primarily for a business, commercial or agricultural purpose" (12 CFR 1026.3, current as of October 29, 2026). We found no federal rule requiring a business lender to quote an APR. Two state laws we reviewed fill part of the gap:
- California. SB 1235 requires providers of commercial financing for small businesses to give disclosures for transactions up to $500,000 (DFPI summary). DFPI's regulations require the amount of funding, the APR, the finance charge and payment amounts, and a federal court upheld them in December 2023 (DFPI, December 5, 2023).
- New York. The commercial finance disclosure law covers offers of up to $2,500,000 (DFS, February 1, 2023). Under 23 NYCRR 600, a provider must disclose the APR with a specific offer, the finance charge includes every charge Regulation Z's section 1026.4 would count, and the closed-end form has a "Prepayment" section saying whether paying early still costs part of the finance charge or extra fees.
Not every provider or deal is covered, so ask. Fees taken out of the funds deserve a close look: in a 2020 case against Richmond Capital, the FTC alleged that upfront fees were deducted and that what businesses received was "often substantially less than the total amount promised" (FTC, June 10, 2020).
Questions to ask every lender before you sign
Ask each lender for the same items in writing:
- The amount you'll receive after every deduction, with each fee itemized.
- The APR and how it was calculated.
- The total of all payments over the full term.
- Any recurring fee, such as a monthly servicing fee.
- The payoff terms: whether there's a penalty, how it's calculated and when it ends.
- On an SBA 7(a) loan, this year's guaranty fee and any packaging fee (above $2,500, SBA Form 159 is required).
In the Federal Reserve Banks' 2026 Report on Employer Firms, from the 2025 Small Business Credit Survey of 6,525 employer firms with 1 to 499 employees (a convenience sample fielded September 3 to November 14, 2025), 60% of firms that borrowed from online lenders said actual borrowing costs were higher than expected, against 37% at small banks and 32% at large banks.
EQ Funding routes one application to lenders who compete to fund your business, so you can compare business term loans and SBA loans on these lines. EQ doesn't lend; lenders assess credit and repayment ability, and approval, fees and terms vary by lender. For a full method, see how to compare business loan offers.