The U.S. Small Business Administration (SBA) announced that it will reinstate lender fees for its flagship 7(a) loan program, ending a pandemic-era policy that waived the fees. The decision is part of a broader effort to strengthen the program’s financial integrity and ensure it continues to operate without relying on taxpayer subsidies.
The 7(a) program is a key source of capital for small businesses that may not qualify for traditional financing. However, between 2022 and 2024, the SBA estimates it waived more than $460 million in lender fees. During this period, relaxed underwriting standards and increased non-bank lender participation led to a rise in defaults.
As a result, the SBA projects a $397 million deficit for Fiscal Year 2024—the program’s first shortfall in over thirteen years. Officials say the fee reinstatement is essential to restore balance and accountability in the system.
“Since its inception, the 7(a) loan program has launched millions of small businesses,” said SBA Administrator Kelly Loeffler. “To safeguard taxpayer-backed capital and small business formation, the SBA is taking immediate action.”
The reinstated fees take effect for Fiscal Year 2025. The SBA says the change will help preserve access to affordable capital for underserved entrepreneurs while keeping the program sustainable for the future.