A Guide to SBA Form 159 for You and Your Clients

SBA Form 159, also referred to simply as the SBA 159, is a document that’s required before some SBA 7(a) and SBA 504 loan packages are considered complete. It’s also one of the forms that generates a lot of questions from lenders and borrowers. We developed this brief guide for you and the SBA borrowers that you serve.

What is the SBA Form 159?

The SBA 159 is used specifically to disclose any fees and compensation that third parties have charged borrowers to use their services. It’s required for some SBA 7(a) and SBA 504 packages.

When is an SBA 159 required?

The SBA 159 is filled out by borrowers and the “third party” individuals and businesses that act as “agents” for the borrower (on the borrower’s behalf). It’s used when these parties facilitate the referral or help complete the application for a borrower and receive a fee for this assistance.

It’s important to note that lenders who charge fees for a referral or application assistance also need to fill out an SBA 159 to disclose these fees.

Examples of who falls into the third party/agent designation includes, but isn’t limited to:

• Business brokers who help fill out the forms or refer a client to a lender and receive a referral fee for the service.
• An online lender-match program that receives a fee for the referral.
• An accountant, attorney or other third party who goes beyond the “normal” course of business and specifically charges a fee for work related to completing or packaging an SBA application for a client.

Why is an SBA 159 required?

The primary goal of the SBA 159 is to protect borrowers and taxpayers from exorbitant or fraudulent charges and fees. The information on the SBA Form 159 can help the SBA review and track fees to determine which are fair and which may be predatory or fraudulent.

What information is needed to fill out the SBA Form 159?

While it sounds daunting and the information is important, the actual SBA Form 159 is very simple to fill out. It includes:

• The name and contact information for any third-party agent.
• The type of agent. Examples include SBA lenders, business brokers, independent loan packagers and even clients’ attorneys or accountants.
• The total fee that each agent charges. In cases in which the fee is more than $2,500, the agent must attach a separate sheet listing:
  • The type of service provided
  • The hourly rate
  • The number of hours billed
• Applicant certification: After the agent fills out the form, the borrower signs off to certify that the agents’ information is accurate. Here’s an important point that often results in errors: The borrower’s name must match the top of the form and for that reason, if the “Applicant” is a corporation or LLC, then the certification must be signed by a duly authorized officer or other representative. For a partnership, a general partner must sign the form.
• Lender certification: Through a quick search of the federal System for Awards Management (SAM), as a lender you’ll certify that you’ve checked to ensure that agents who are party to the transaction haven’t been “debarred, suspended, proposed for debarment, declared ineligible or voluntarily excluded from participation in this transaction by any Federal department or Agency.”

What fees don’t have to be disclosed?

Generally speaking, the following fees don’t have to be disclosed on the SBA 159:

• Fees paid to a borrower’s accountant or attorney for services performed in the normal course of business
• Attorney fees paid in connection with 7(a) loan closings
• Fees paid for services performed by state-licensed professionals such as appraisers, environmental reviews and business-valuation fees.

Where can lenders find the SBA Form 159?

As of April 5, 2020, the SBA has made it easier for borrowers to access and fill out the form by making it available online through the SBA’s Capital Access Financial System (CAFS). When borrowers apply for an SBA loan, each borrower will be provided individualized access information.

When is the SBA Form 159 filed?

The SBA 159 is generated via E-trans at the same time that SBA Authorization is issued. Prudent Lenders’ underwriting and loan-processing team will provide a Form SBA 159 as soon as an SBA Authorization is issued and/or an SBA Loan Number is available. The form(s) must be completed at or before the loan closing.

Contact Prudent Lenders

We’re here to help you and your clients with every step of the SBA loan process. If you have additional questions regarding the SBA Form 159 or anything else SBA, contact us, we can help.