You’re required to submit SBA Form 159 if you or your lender hires 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 by less than half of all SBA loan applications every year.
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More SBA Loan Application Forms:
- SBA Form 1919 Borrower Information Form
- SBA Form 912 Statement of Personal History
- SBA Form 413 Personal Financial Statement
Who Needs to Complete SBA Form 159
The most difficult part of SBA Form 159 is determining whether or not you need to complete it. Due to the complexity and time it takes to complete an SBA loan application many borrowers, or lenders, hire a professional to help. If you fall into this category then you must fill out SBA Form 159, but if you’re unsure then each is defined below.
The two reasons you would need to fill out SBA Form 159:
1. You’ve Paid an Agent
If you (the Applicant) have paid (or will be paying) compensation to an Agent or to the Lender for help with your application, then you must fill out SBA Form 159.
2. Your Lender is Paying a Referral Fee
Sometimes your lender will pay referral fees to agents who have brought your loan to them, or they’ll pay third parties to handle the administrative portion of the SBA lending process. You make sure this is clear upfront with your lender so that you know what your obligations are.
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, and consultants, and “any other party that receives compensation from representing an applicant or lender in connection with an SBA loan” all qualify as agents. If you or your lender hired anyone who fits this description, you must complete this form. The SBA does not consider the following people agents:
- The Applicant’s accountant for the preparation of financial statements required by the Applicant in the normal course of business and not related to the loan application.
- A state-certified or state-licensed appraiser employed by the Lender to appraise collateral in connection with the SBA loan.
- A lender service provider operating under an SBA-approved lender service provider agreement.
- An individual who only performs a business valuation as long as the individual does not provide any other services to the Applicant in connection with the loan application.
- An environmental professional employed by the lender to conduct an environmental assessment of the collateral in connection with the SBA loan.
- A real estate agent who receives a commission for selling real estate in connection with an SBA loan.
- Any attorney in connection with the 7(a) loan closing. Hiring a professional loan packager can cost anywhere from $500-4500, but can go up to $20,000 depending on the exact services rendered and the size and complexity of the loan.
Keep in mind that this form is not required by the majority of SBA borrowers. Of the 44,509 SBA 7a and 504 loans awarded in 2016, only about 15,000 needed to submit SBA Form 159 (about 33%). According to Lola Kress, Communications Director at the SBA, they’ve received about 15,000 Form 159’s in each of the past few years.
How to Fill Out SBA Form 159
If you or your lender hired an agent, you must fill out one Form 159 for each agent. There are three different versions of Form 159: one for 7a loans, one for 504 loans, and one for 7a disaster loans. These forms are fairly similar, especially in terms of what is required of the applicant, but there are subtle differences that are worth going over quickly. Regardless of the form you use, make sure that it is still valid and has not expired.
SBA Form 159 (7a Loans): Download Here
The Applicant, the Agent, and the Lender must sign this version of the form. The first section that you must be aware of is the “Loan Applicant Name” field on the top of page 2. For this section, you should use the same name that is on your loan application. This means that if the loan application is under your personal name, use your personal name. If the loan application is under the name of a partnership, corporation, or LLC, you should use this name as it appears on your SBA loan application and tax forms.
For the next section “Loan Applicant Business Name (if any)”, you should write in the name of your business as it appears on your other SBA loan application forms and federal tax forms. The next section, titled “Agent’s Agreement and Certification” will be filled out and signed by your agent.
You should make sure to verify that all of the information your agent provides seems accurate, especially the “Total Compensation Charged to Applicant” field. This should be the sum total of all the bills you have received from your agent. If this total is greater than $2,500, your agent is responsible for providing an itemized list of all services provided.
This list should be itemized in a way that shows the hourly rate, the number of hours spent on each item, and the total cost per item. If all of the information provided by your agent is accurate, you must certify this on the bottom of page 2 under the section “Applicant’s Certification”.
For the “Applicant’s Name” field, use the same applicant name that you used above. In the “Signature of Authorized Representative” field, you must provide the signature of an authorized representative. If you used your personal name as the “Applicant’s Name”, then simply sign and print your name. If the “Applicant’s Name” is a corporation or limited liability company, the certification must be signed by a duly authorized officer or other representative of the entity. If it is a partnership, a general partner must make the certification.
Once you have certified the accuracy of the information, your lender will also certify the form. Make sure that your lender includes any referral fee that they paid, and both the business name and personal name of the particular agent they used. At the very bottom or the form, either you or your lender should write in the SBA Loan number of you application. At the very bottom of the form, either you or your lender should note down the SBA loan number associated with your SBA loan application.
SBA Form 159D for Disaster Loans: Download Here
The 159 form for disaster loans is almost the exact same as the 7a form, except that it does not include the lender certification section. From the Applicant’s perspective, however, all the sections remain the same.
SBA Form 159 (504 Loans): Download Here
The main difference between the form for the 7a and 504 SBA loans is that the 504 form replaces the “Lender’s Certifications” section with a “CDC’s Certifications” section. The reason for this is that the CDC/504 loan program is run through Certified Development Companies (CDCs). This means that the CDC will certify any agents used. In some cases, the CDC may act as a referral agent to a third party lender. If this is the case, make sure that the CDC discloses any fees it received from this third party lender.
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Purpose of SBA Form 159
SBA Form 159 is for the purpose of reporting any fees that are getting paid in the transaction for the origination of SBA financing. This prevents lenders from paying subsidiaries, or related parties, additional fees and charging the borrower. It also keeps the SBA’s mission of helping small businesses find affordable lending, because it helps keep the total loan costs down.
“The SBA Form 159 is a fee disclosure form that is completed and sent to the SBA whenever fees are paid by the applicant or lender in connection with an SBA loan. Most often these fees are loan packaging fees the applicant pays their bank for closing the SBA loan but the form also captures fees paid to independent loan packagers, brokers, and referral agents when they are involved in the financing process.”
— Lola Kress of the SBA
Bottom Line: SBA Form 159
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.
If you’re still considering whether to apply for an SBA loan, we recommend starting with SmartBiz. You fill out one online application, find out if you’re prequalified, and then SmartBiz matches you with their partner lender most likely to approve and fund your loan. You can find out if you pre-qualify for up to $350K in minutes while avoiding the hassle of filling out multiple applications and SBA forms yourself.
More SBA loan application forms: