SBA Form 159: What It Is & How To Fill It Out
Tom has 15 years of experience helping small businesses evaluate financing and banking options. He shares this expertise in Fit Small Business’s financing and banking content.
This article is part of a larger series on Business Financing.
SBA Form 159 is required if you or your lender hire a loan packager, referral agent, broker, accountant, attorney, or consultant to help prepare or secure your SBA loan. SBA Form 159 is less common than other SBA forms, only being filled out with less than 40% of SBA loan applications annually. The purpose of SBA Form 159 is to report any fees paid in the transaction for the origination of SBA financing.
When SBA Form 159 Is Required
Due to the complexity and time that it takes to complete an SBA loan application, some borrowers, or lenders, hire a professional to help. This often falls into one of two categories:
- You paid an agent: You pay compensation to an agent or the lender for help with your loan application.
- Your lender is paying a referral fee: Lenders may occasionally pay referral fees to agents who have brought your loan to them. Also, the lender may pay a third party to handle the administrative portion of the lending process. Your lender should disclose this information to you upfront.
If multiple agents were hired, a separate form must be submitted for each one. To determine if you need to fill out SBA Form 159, you must first decide whether you have paid someone who meets the SBA’s legal definition of an “agent.”
Defining an ‘Agent’
According to the SBA, loan packagers, referral agents, brokers, accountants, attorneys, consultants, and “any other party that receives compensation from representing an applicant or lender in connection with an SBA loan” may all qualify as agents.
However, many services performed by those individuals as part of the loan application process are exempt from SBA Form 159. Some examples include:
- Your accountant prepares financial statements required in the normal course of business and not related to the loan application.
- A state-certified or state-licensed appraiser employed by the lender appraises collateral in connection with the SBA loan.
- You work with a lender service provider operating under an SBA-approved lender service provider agreement. This includes SCORE, the Small Business Development Centers, and others.
- An individual performs a business valuation, with no additional services performed in connection with the loan application.
- An environmental professional is employed by the lender to conduct an environmental assessment of the collateral in connection with the SBA loan.
- A real estate agent receives a commission in connection with the sale of real estate.
- You work with an attorney in connection with an SBA loan closing.
General rule of thumb: If you or your lender paid someone to help you complete your SBA loan application or you paid someone to find a lender to get your SBA loan application approved, you need to fill out the form.
How To Fill Out SBA Form 159
You must fill out one Form 159 for each agent used. There are two different versions of Form 159: one that covers both 7a and 504 loans, and one for SBA disaster loans.
SBA Form 159 (7a and 504)
First, on page 2, identify whether you have applied for an SBA 7(a) loan or a 504 loan. If the loan application is under your personal name, use that. If the loan application is under the name of a partnership, corporation, or limited liability company (LLC), use this name as it appears on your SBA loan application and tax forms. You will then include your SBA loan number.
Your SBA lender will provide their legal business name and FIRS, which is their identification number for the SBA. Then, you list the corporate name of the agent that assisted you, the individual agent’s name, and the agent’s address. The type of agent then needs to be marked.
In the “Type of Service” table, the fees paid by both applicant and the SBA lender for various services are broken down. If the amount paid totals more than $2,500, itemization and supporting documentation of the fees are required. The itemization needs to include details on the work performed, along with an hourly rate and the number of hours spent on each activity. Even if the amount does not exceed $2,500, the SBA may request this documentation from you.
With 504 loans, the certified development company (CDC) may act as a referral agent to a third-party lender (TPL). If this is the case, make sure that the CDC discloses any fees it received from the TPL.
The applicant, the agent, and the SBA lender must all sign this form.
SBA Form 159D for Disaster Loans
SBA Form 159D is used for both personal disaster home loans and business disaster loans. This form has less information to fill out and also has different requirements than the form for 7(a) and 504 loans. First, the only personal or business information needed from the applicant is the loan applicant’s name and the business name.
Second, the information required on Form 159D regarding compensating an agent involves checking any appropriate boxes and listing the total compensation amount. Like SBA Form 159, the SBA requires itemization of all services that exceed $2,500 on disaster business loans. Since this form is also used with home loans, in those situations, the itemization requirement is $500.
Only the applicant and the agent would be required to sign SBA Form 159D.
Bottom Line
Overall, SBA Form 159 is one of the simplest forms to fill out, but it’s only used by less than half of all SBA loan applicants. If any third parties are getting paid in the loan transaction, or have already been paid, then you may need to fill out the form.
