The Small Business Administration, saying that it needs to shore up the finances of its flagship 7(a) loan guarantee program, has implemented a rare midyear fee hike.
The move, which the agency announced Thursday, eliminates fee waivers and discounts on loans of up to $1 million. Those fee waivers and discounts had been in place since the start of SBA's 2023 fiscal year.
Normally, the SBA implements changes to its fee structures at the start of its fiscal year on Oct. 1. However, Administrator Kelly Loeffler said quicker action was needed to counteract 7(a)'s deteriorating fiscal position. Fee relief resulted in more than $460 million in uncollected revenue, as well as negative cash flow totaling $379 million during fiscal 2024, according to Loeffer.
"To safeguard taxpayer-backed capital and small business formation, the SBA is taking immediate action to reverse these policies, starting with the restoration of lender fees to protect the future of the program," Loeffler said in a press release.
Under the 7(a) program, the SBA provides loan guarantees ranging from 50% to 85% on small-business loans of up to $5 million.
It's the agency's biggest program. In fiscal 2024, which ended Sept. 30, more than 1,400 banks and credit unions participated, making 70,242 loans totaling more than $31 billion. The program appears on pace to exceed those totals in fiscal 2025, with 42,500 loans totaling $18.7 billion on the books through Thursday.
Loeffler's decision to normalize fees came a month after lender groups
"Fee waivers are a great tool — when we can afford them," Kristen Granchelli, senior vice president of government and public affairs at the National Association of Government Guaranteed Lenders, told American Banker. "We're grateful to Administrator Loeffler for the leadership and foresight to make the necessary changes to the fee waivers in order to protect the 7(a) Loan Program and prevent a positive subsidy in FY26, which could mean far more significant cost consequences than fee waivers."
The zero-subsidy status means the program's credit costs are paid entirely from revenue generated by the fees the agency charges banks and lenders that use 7(a). No federal appropriation, or subsidy, is involved. Small-business advocates say zero-subsidy status is necessary to maintain the program's high degree of support among lawmakers and the general public.
"This program is intended to be self-sustaining, ensuring proper support for small businesses nationwide while safeguarding taxpayer funds," House Small Business Committee Chairman Roger Williams, R-Texas, said Thursday in a statement. "We support President Trump and SBA Administrator Loeffler's immediate action to begin reinstituting guardrails and fees to this vital program."
"I am relieved to see the SBA follow my recommendations to restore the financial foundation of the 7(a) program," Iowa Republican Sen. Joni Ernst, chairwoman of the Senate Committee on Small Business and Entrepreneurship, said in a press release.
The now-reversed fee waivers were part of a broader effort during the Biden administration to
The SBA stated in its press release Thursday that it was reviewing its underwriting policies, adding that it planned to announce "additional changes to safeguard the future of the 7(a) loan program" over the next few weeks.
Efforts to reach Casillas Guzman were unsuccessful. Rep. Nydia Velazquez, the ranking Democrat on the House Small Business Committee, did not respond to a request for comment by deadline.
