November 1st, 2018 the SBA combined SBA Form 159(7a) and SBA Form 159(504) into one form known simply as Form 159.
Form 159 requires applicants to disclose services and fees charged by an Agent hired in connection with applying for an SBA loan whether a 7(a) or 504.
The purpose of this form is threefold.
- To reduce fees paid by applicants in connection with applying for an SBA loan
- To protect applicants from predatory Agents who charge unreasonable fees
- To promote transparency and integrity between all parties involved with assisting the applicant
The applicant is required to complete the form after the loan has been approved. The applicant must identify the Agent and disclose the party responsible for paying the fee and amount paid for the following services:
Loan packaging services, performed by an SBA Lender or other third party or referral agent employed by the Applicant
Financial statement preparation specifically for the loan application
Consulting, Broker, or Referral services paid by the Applicant, SBA Lender, or Third Party Lender
Form 159 explicitly states the Agent may not be compensated by both Applicant and SBA Lender for the same service. Also, If the compensation paid exceeds $2,500, the Agent must provide supporting documents that include: A detailed explanation of the work performed and The hourly rate(s) and the number of hours spent working on each activity
Fees paid to the following individuals for their services in connection with the SBA loan application are not required to be disclosed on this form:
- Applicant’s accountant performing services in the normal course of business
- Any attorney in connection with the 7(a) or 504 loan closing
- A state-certified or state-licensed appraiser employed by the SBA Lender to appraise collateral
- An environmental professional employed by the SBA Lender to conduct an environmental assessment of the collateral
- A real estate agent who is receiving a commission for the sale of real estate
Once you’ve completed the form, the SBA Lender and Agent are required to sign. You are also required to sign, certifying the honesty and accuracy in which you’ve completed the form to the Federal Government. Therefore always, I stress always complete this form honestly and accurately. Inaccurate or fraudulent information will be discovered.
In conclusion, the Fee Disclosure and Compensation Agreement is vitally important to successfully completing the SBA loan application. It’s a regular practice for your SBA Lender to help you complete the form. If you have questions that your SBA Lender cannot answer, you may contact your ThinkSBA loan specialist when appropriate.
Congratulations! You’re now ready to complete the Fee Disclosure and Compensation Agreement Form 159.
My SBA Loan Pro
The My SBA Loan Pro Podcast is hosted by Your SBA Loan Pro, Ryan Smith. In each episode Ryan provides valuable information and best practices regarding the SBA loan program.
Each episode is approximately one minute in length and addresses topics related specifically to SBA 7(a) and 504 loan programs to purchase real estate, acquire a business or franchise and obtain working capital.
You’re encouraged to listen and subscribe to ensure you’re notified each time a new episode is available. Ryan publishes a new episode weekly on Tuesday mornings, unless he’s kidnapped to a deserted island of course.
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