You are expected to submit SBA Form 159 in case your lender hires a loan packager, referral agent, agent, accountant, lawyer, or consultant to help prepare or secure your SBA loan. SBA Form 159 is less common compared to other SBA types, only being filled out by less than half of SBA loan applications every year.
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More SBA Loan Application Forms:
- SBA Form 1919 Borrower Information Form
- SBA Form 912 Record of Personal History
- SBA Form 413 Personal Financial Statement
Who Wants to Complete SBA Form 159
The toughest part of SBA Form 159 is determining whether or not you want to complete it. Due to the complexity and time necessary to complete an SBA loan application many borrowerslenders or lenders, hire a professional to help. If you fall into the category then you have to fill out SBA Form 159, but if you’re unsure then each is described below.
Both reasons you would need to fill out SBA Form 159:
1. You’ve Paid an Agent
Should you (the Applicant) have paid (or will be paying) reimbursement to an Agent or to the Lender for help with your program, then you must fill out SBA Form 159.
2. Your Lender is Paying a Referral Fee
Sometimes your lender will pay referral fees to brokers who’ve attracted your loan on them, or else they’ll cover third parties to handle the administrative part of the SBA lending procedure. You make sure that this is clear upfront with your lender so that you understand what your obligations are.
If multiple representatives were hired a separate form has to be filed for every one. To determine if you have to complete SBA Form 159, then you must first choose whether you’ve paid somebody who meets the SBA’s legal definition of an”Agent.”
Finding an”Agent”
According to the SBA, loan packagers, referral agents, brokers, accountants, attorneys, and advisers, and”another party that receives reimbursement from representing an applicant or lender in connection with an SBA loan” all qualify as brokers. In the event that you or your lender hired anyone who matches this description, then you need to complete this form. The SBA Doesn’t think about the following people representatives:
- The Applicant’s accountant for the preparation of financial statements required by the Applicant from the regular course of business and not linked to the loan program.
- A state-certified or state-licensed appraiser employed by the Lender to appraise collateral in relation to the SBA loan.
- A lender service supplier working under an SBA-approved lender service supplier arrangement.
- An person who only performs a business valuation so long as the person does not provide some other solutions to the Applicant in relation to the loan program.
- An environmental professional employed by the lender to conduct an ecological assessment of the security in connection with the SBA loan.
- A real estate agent who receives a commission for selling real estate in relationship with an SBA loan.
- Any lawyer in relation to the 7(a) loan closing. Employing a professional loan packager can cost anywhere from $500-4500, but can go up to $20,000 based on the exact services rendered and the size and complexity of the loan.
Keep in mind that this form isn’t needed by nearly all SBA borrowers. Of those 44,509 SBA 7a and 504 loans given in 2016, only about 15,000 needed to submit SBA Form 159 (about 33%). Based on Lola Kress, Communications Director at the SBA, they’ve obtained about 15,000 Form 159’s in each of the past few years.
How to Fill Out SBA Form 159
In the event that you or your creditor hired a broker, you have to fill out one Form 159 for every broker. There are 3 distinct versions of Form 159: one for 7a loans, one for 504 loans, and one for 7a disaster loans. These forms are fairly similar, particularly in terms of what is required of the candidate, however there are subtle differences that are worth moving over fast. Regardless of the kind you use, make sure it is still valid and hasn’t 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 your”Loan Applicant Name” field at the top of page two. With this section, you need to use the exact same name that is on your loan application. This implies that when the loan application is under your personal name, use your private name. If the loan application is under the name of a partnership, company, or LLC, you need to use this title as it appears on your SBA loan application and tax types.
For the next part”Loan Applicant Business Name (if any)”, you should write in the title of your business as it appears in your other SBA loan application forms and federal tax forms. The following section, titled”Agent’s Agreement and Certification” will be filled out and signed by your agent.
You need to make sure to confirm that all of the information your broker supplies seems true, especially the”Total Compensation Charged to Applicant” field. This ought to be the sum total of all of the invoices you have received from your agent. If this total is higher than $2,500, your agent is accountable for supplying an itemized listing of services provided.
This list should be itemized in a way that shows the hourly fee, the amount of hours spent on each item, and the total cost per item. If all 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 identical applicant name that you used above. From the”Signature of Authorized Representative” area, you must offer the signature of an authorized representative. If you used your own name as the”Applicant’s Name”, then only sign and print your title. When the”Applicant’s Name” is a corporation or limited liability company, the certificate must be signed by a duly authorized officer or other representative of the entity. When it is a partnership, a general partner must make the certification.
Once you have certified the accuracy of this information, your lender will also reevaluate the form. Make sure that your lender comprises any referral fee they paid, and both the company name and personal name of the particular broker they used. At the very base or the form, either you or your creditor should write in the SBA Loan number of you program. In the very bottom of this form, either you or your creditor should note down the SBA loan amount related to your SBA loan program.
SBA Form 159D for Disaster Loans: Download Here
The 159 type for crisis loans is almost the exact same as the 7a type, except it doesn’t incorporate the lender certification section. From the Applicant’s perspective, however, all the segments remain the same.
SBA Form 159 (504 Loans): Download Here
The most important 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 cause of this is that the CDC/504 loan application is conducted through Certified Development Companies (CDCs). This usually means that the CDC will reevaluate any brokers used. Sometimes, that the CDC may function as a referral agent to a third party lender. If this is true, make sure the CDC discloses any fees it received from the third party lender.
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Goal of SBA Form 159
SBA Form 159 is for the purpose of reporting any fees which are getting paid from the trade for the origination of SBA financing. This prevents creditors from paying subsidiaries, or associated parties, additional fees and charging the debtor. In addition, it keeps the SBA’s mission of helping small businesses find affordable lending, because it will help maintain the total loan costs down.
“The SBA Form 159 is a charge disclosure form that’s completed and delivered to the SBA when penalties are covered by the applicant or lender in connection with an SBA loan. Most often these fees are loan packing fees that the applicant pays their bank for shutting the SBA loan but the form also captures fees paid to separate loan packagers, brokers, and referral brokers when they’re involved with the funding procedure.”
— Lola Kress of the SBA
Bottom Line: SBA Form 159
In general, SBA Form 159 is one of the easiest forms to fill out, but it is just used by less than half of 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 are still contemplating whether to apply for an SBA loan, then we recommend starting with SmartBiz. You fill out a online program, learn when you’re prequalified, and then SmartBiz suits you with their partner creditor most inclined to approve and fund your loan. You can figure out in the event that you pre-qualify up to $350K in moments while avoiding the hassle of filling out numerous programs and SBA types yourself.
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More SBA loan application forms:
- SBA Form 1919 Borrower Information Form
- SBA Form 912 Record of Personal Background
- SBA Form 413 Personal Financial Statement
