SBA Form 159, the Fee Disclosure and Compensation Agreement, must be completed whenever an agent is paid for helping obtain an SBA loan: a broker or referral agent, a loan packager or a consultant. It names the agent, the services, the amount and who pays it, the borrower or the lender. The borrower, the agent and the lender sign it, and the lender reports it to SBA. SBA requires it so that borrowers see every fee before closing and so that SBA can police agents.
- Full name
- SBA Form 159, Fee Disclosure and Compensation Agreement
- Required when
- Anyone is paid, by borrower or lender, for services connected to an SBA loan
- Signed by
- The borrower, the agent and the lender
- Shows
- The agent, the services, the compensation and who pays it
- Goes to
- The lender's file, with the fee information reported to SBA
- Programs
- SBA 7(a) and 504
What the form records
SBA calls anyone paid to help with an SBA loan an agent, and it regulates agents directly. Form 159 is the agreement and disclosure for one agent on one loan. It sets out who the agent is, what the agent did, how much the agent is being paid, and whether the money comes from the borrower or the lender. Where a borrower pays an agent, it also serves as the written compensation agreement between them. A loan with two agents, say a packager and a referral agent, needs two forms.
Each party certifies something different. The borrower certifies the fee and that the services were provided. The agent certifies that the disclosure is complete and that it has not been paid anything else in connection with the loan. The lender certifies that it knows of no other payments. The lender then keeps the form and reports the fee information to SBA, which is how SBA sees, across its whole portfolio, who is being paid on its loans and how much.
Who counts as an agent
| Type of agent | What they do | Who usually pays |
|---|---|---|
| Referral agent or broker | Introduces the borrower to a lender, and often helps shape the request | Either the borrower or the lender, not both for the same services |
| Loan packager | Prepares the application and supporting materials for the borrower | Usually the borrower |
| Consultant or financial adviser | Advises the borrower on the financing, projections or business plan | The borrower |
| Accountants and attorneys | Ordinary tax, accounting or legal work | The borrower; disclosure applies when their work is for obtaining the loan, beyond their usual services |
A fee does not escape disclosure by being called something else. A "success fee", "consulting fee" or "retainer" paid to someone who helped get the loan is compensation to an agent. If the borrower's accountant also prepared the loan application, the lender will ask whether that work needs its own Form 159.
Why SBA insists on disclosure
SBA's guaranty puts public money behind the loan, and SBA has a long history of dealing with agents who charged borrowers heavily for little work, took payment from both sides, or were paid out of loan proceeds without the borrower understanding it. Form 159 is the remedy: every fee on paper, signed by the person paying it, before closing.
Disclosure does three things. The borrower sees the full cost of getting the loan, not just the rate, which matters when comparing the all-in cost of offers. The lender can confirm that no one is being paid twice and that fees paid from loan proceeds are for legitimate services. And SBA can find patterns: an agent whose loans default unusually often, or who charges far more than peers, can be investigated and barred from the program.
If someone helping with your SBA loan will not put their fee on a Form 159, they should not be paid, and the lender will not close with an undisclosed agent in the file.
What the borrower should check before signing
- The amount is the whole amount. It should include every payment connected to the loan: upfront, at closing, and anything contingent on approval.
- The payer is right. If the lender is paying the agent, the form should say so, and nothing should also be coming from you for the same services.
- The services are real and described. Vague descriptions invite questions from the lender and from SBA.
- Fees from proceeds are visible. If an agent's fee is being paid from the loan, it appears in the use of proceeds and in the loan authorization as well.
- It matches Form 1919. The Borrower Information Form asks whether anyone helped with the application for a fee. The answers must agree.
SBA also requires the fees a borrower pays an agent to be reasonable for the work done, and the lender and SBA judge that against the services described on the form. A borrower who has doubts can ask the lender directly; lenders see many of these forms and know what is ordinary.
The other fees on an SBA loan, and where they are disclosed
Form 159 covers agents. Other costs of an SBA loan are documented elsewhere, and it helps to know which is which.
| Cost | Who charges it | Where it shows up |
|---|---|---|
| Agent, broker, packager or consultant compensation | The agent | SBA Form 159 |
| SBA upfront guaranty fee | SBA, collected through the lender | Loan authorization and closing statement |
| Lender's permitted fees | The lender, within SBA's limits | Loan authorization and closing statement |
| Third-party reports (appraisal, business valuation, environmental) | The provider | Closing statement; paid by the borrower directly or from proceeds |
| Legal and closing costs | Attorneys, title, filing offices | Closing statement |
The SBA guaranty fee is the largest fixed cost on most 7(a) loans. The rest of the picture is in what fees to expect when closing a business loan and on SBA loan rates.
How Transparent appears on Form 159
Transparent charges nothing before a loan closes: no application fee and no retainer. On SBA loans the lender pays Transparent, not the borrower. That compensation is disclosed on Form 159 like any agent's, and the borrower signs the form and sees the figure before closing. There is no second payment from the borrower for the same work.
The disclosure is the point. A borrower comparing an SBA loan arranged through an adviser with one arranged direct should be able to see exactly what the adviser is paid and by whom. The broader trade-offs are in using a debt broker vs going direct to your bank, and what Transparent does for that compensation is on what we do and the package.
Common questions
- Do I need a Form 159 if I didn't use a broker?
- Not for a broker. If nobody other than the lender was paid in connection with the loan, there is no agent to disclose. Form 1919 will still ask you to confirm whether anyone was paid to help with the application.
- Can a broker be paid by both me and the lender?
- Not for the same services. A referral agent is paid by one side or the other, and Form 159 records which. Where an agent does genuinely separate work for each side, each arrangement is disclosed, and the lender will look hard at whether the services really differ.
- Can the agent's fee be paid from the SBA loan?
- Reasonable fees for services connected to the loan can be, if disclosed on Form 159 and shown in the use of proceeds. A fee the borrower did not know about cannot be buried in the proceeds.
- What happens if a fee isn't disclosed?
- An undisclosed fee puts the lender's guaranty at risk and can lead SBA to act against the agent. The lender will not close knowingly with an undisclosed agent, so tell it about anyone you have agreed to pay.
- Does Form 159 apply to SBA 504 loans?
- Yes. Agents paid in connection with a 504 loan are disclosed on Form 159 as well, through the CDC.