What is the difference between an SBA referral, a broker, and a packager?

An SBA referral partner introduces a business to an SBA lender and earns a regulated referral fee (capped at 1%) without involvement in preparing the application. An SBA loan broker actively works to find the right SBA lender for a client's needs and may assist with gathering documents, but may not hold SBA authorization itself. An SBA loan packager prepares the full SBA application package — business plan, financial projections, tax returns, SBA forms — and may charge a packaging fee disclosed to the borrower. These roles have different fee limits and SBA disclosure requirements.

How ISO Brokers and Referral Partners Work with SBA 7(a) Loans

Q: Can an ISO broker earn a fee on an SBA 7(a) loan?

Yes, but SBA broker and referral fees are regulated by SBA guidelines. A pure referral partner who introduces a business to an SBA lender without packaging the application can earn a referral fee of up to 1% of the funded loan amount. Brokers who package the SBA application — gathering documents, completing forms, presenting to the lender — can charge a packaging fee subject to SBA limits and required disclosure to the borrower and lender. You cannot charge both a referral fee and a packaging fee on the same deal without specific compliance review.

Q: How long does an SBA 7(a) loan take to close?

SBA 7(a) loans typically take 60 to 90 days to close from complete application submission. Preferred Lender Program (PLP) lenders, who have delegated authority to make SBA credit decisions without submitting to the SBA for approval, can sometimes close in 30–45 days. Complex deals, real estate-secured loans, or deals requiring additional SBA review can take 90+ days. This timeline is significantly longer than alternative lending products and is the primary reason brokers must set accurate client expectations from the beginning.

Q: What businesses qualify for SBA 7(a) loans?

SBA 7(a) eligibility requires: the business must be a for-profit U.S.-based business, must be a small business under SBA size standards for its industry, must demonstrate the ability to repay from business cash flow, and the owner must have exhausted or demonstrated the inability to access conventional financing first. Owner personal credit scores are typically 650+ for most SBA lenders, time in business is usually 2+ years, and the business must not be in an ineligible industry (gambling, lending, speculation, etc.).

Q: When should a broker recommend SBA versus alternative lending?

SBA 7(a) is appropriate when the business qualifies (2+ years, profitable, good credit, documented financials), needs a larger loan amount ($250,000–$5 million), needs a longer repayment term (5–25 years), or is purchasing real estate or a business acquisition where long terms and low rates are essential. Alternative lending is more appropriate for businesses that need capital quickly (days, not months), have credit or documentation issues that disqualify them from SBA, need smaller amounts ($25,000–$250,000), or cannot wait 60–90 days for the SBA process.

The broker's role in SBA transactions

The SBA 7(a) loan program is government-backed — the SBA guarantees a portion of each loan made by approved SBA lenders, reducing the lender's credit risk and enabling more favorable terms for borrowers. The SBA does not lend directly; loans are made by banks, credit unions, CDFIs, and other SBA-approved lenders who originate and service SBA deals using SBA's guarantee programs.

In this structure, an ISO broker or referral partner does not submit directly to the SBA. The broker's role is to identify an SBA-eligible client, prepare or assist with the deal package as appropriate for their role, and connect the client with the right SBA lender. The SBA lender makes the credit decision, obtains the SBA guarantee, and funds the loan.

The SBA distinguishes between three categories of third-party involvement, each with different rules:

Referral partner

A referral partner introduces a business to an SBA lender without involvement in preparing the application or advising on the SBA program specifics. The referral partner's role ends after the introduction — the lender handles the application from there. Referral partners earn a referral fee (regulated, up to 1% of funded amount) that must be disclosed in writing to both the borrower and the lender before closing. This is the simplest role and the most appropriate for CPAs, attorneys, financial advisors, and other professionals who encounter SBA-eligible clients but are not in the loan business.

Loan broker

An SBA loan broker actively helps the borrower find the right SBA lender and program, may assist with gathering documents and preparing the application, and has a more active advisory role than a pure referral partner. Brokers must disclose their fees to both the borrower and the lender. The SBA has specific rules about what brokers can and cannot do in SBA loan transactions, and broker fees must comply with SBA guidelines. Some SBA lenders will work with brokers; others prefer to handle referrals directly without broker involvement in the application process.

Loan packager

An SBA loan packager prepares the complete SBA loan package — business plan, financial projections, three years of business and personal tax returns, interim financial statements, SBA forms, and any required collateral documentation. Packaging is a significant service that requires deep knowledge of SBA requirements. Packagers charge a packaging fee (disclosed to borrower and lender) in addition to or instead of a referral fee. Packaging fees are subject to SBA guidelines and are reviewed as part of the loan application. Not every deal needs a packager — straightforward applications with organized borrowers often do not.

For most commercial finance ISO brokers and referral partners, the referral partner role is the most practical starting point for SBA involvement. It requires a relationship with one or more SBA preferred lenders (PLP status), a clear understanding of SBA eligibility criteria, and a written referral agreement with the lender that specifies the fee and disclosure terms. This is achievable without specialized SBA training and allows you to earn meaningful income on deals that qualify for SBA without taking on the liability of packaging or the regulatory complexity of being a registered SBA loan packager.

SBA broker and referral fee structure

SBA broker and referral fees are not governed by individual agreements between the broker and lender alone — they are subject to SBA guidelines that set maximums and require specific disclosures. Operating outside these guidelines creates regulatory risk for both the broker and the lending institution. Understanding the fee rules is non-negotiable before placing your first SBA deal.

Referral fees: For a pure referral — where the broker simply introduces the business to the SBA lender without involvement in the application — the SBA allows referral fees up to 1% of the loan amount for loans up to $1 million. For loans over $1 million, the permissible fee percentage decreases. The fee must be disclosed to the borrower and the SBA lender in a written agreement before the loan closes, and the lender must include this disclosure in the loan file submitted to the SBA.

Packaging fees: Packaging fees — for preparing the SBA application package — are capped by SBA guidelines that have varied over time. As of current SBA program rules, packaging fees must be reasonable and disclosed, and the SBA scrutinizes them in its loan review process. Packagers who charge fees not disclosed to the lender, or who charge fees above SBA-permitted levels, create compliance problems that can result in the SBA refusing to honor its guarantee on the loan.

No double-dipping: The SBA does not permit charging both a referral fee and a packaging fee on the same transaction. If you are acting as the referral source, your fee is the referral fee. If you are preparing the package, your fee is the packaging fee. A single fee for a single role is the compliant structure.

On a $1 million SBA 7(a) loan at a 1% referral fee, the broker earns $10,000 in commission income. This compares favorably with the alternative lending commission on a similar deal size, particularly given the lower risk profile — SBA deals have no clawback exposure for referral partners. On a $2 million SBA loan, the economics are equally compelling even at a lower percentage.

SBA 7(a) eligibility criteria

Accurate pre-qualification for SBA eligibility is the most important skill for any broker who wants to identify SBA candidates from their deal flow. Not every business that wants an SBA loan qualifies for one, and not every SBA application that looks good on the surface will pass the full credit review. The criteria below represent the standard eligibility framework for SBA 7(a) loans — deals that meet all criteria are genuine SBA candidates; deals that miss on multiple criteria should be directed toward alternative products.

For-profit U.S. business. SBA loans are only available to for-profit businesses physically located and operating in the United States. Nonprofits, passive investment businesses, gambling operations, certain lending businesses, and speculative activities are explicitly ineligible. Confirm the basic structure before proceeding.
Size standards. The business must qualify as a "small business" under SBA size standards for its NAICS industry code. Size standards are typically expressed as annual revenue maximums (ranging from $1 million to $47.5 million depending on industry) or employee counts. Most businesses with under $10 million in annual revenue qualify under SBA size standards, but verify for the specific industry.
Creditworthiness and repayment ability. The business must demonstrate the ability to repay the SBA loan from operating cash flow — not from the proceeds of the loan itself or from collateral liquidation. This means the business's historical cash flow (typically shown through 2–3 years of tax returns) must support the proposed loan payment with a debt service coverage ratio (DSCR) of typically 1.15x to 1.25x or better.
Owner credit profile. Most SBA lenders require owner personal credit scores of 650+ for standard 7(a) programs. Some community banks and CDFIs will go lower for specific community development programs, but the majority of SBA volume flows through lenders with 650+ credit minimums. Tax liens, recent bankruptcies (within 3 years for many lenders), and recent charge-offs are significant obstacles.
Time in business. Most SBA lenders require 2+ years of operating history. Startups can access SBA 7(a) financing in specific circumstances (SBA loans for franchises, SBA microloan programs) but standard 7(a) lending is heavily weighted toward established businesses. Startups should be directed to alternative lending or SBA microloan programs administered by CDFIs.
Eligible use of proceeds. SBA 7(a) loan proceeds must be used for eligible purposes: working capital, equipment purchase, real estate purchase, business acquisition, refinancing existing business debt, or expansion. The use of proceeds must be documented and must meet SBA guidelines. Personal expenses, real estate investment (speculative), and certain other uses are not eligible.
Exhaustion of conventional financing. SBA's "credit elsewhere" test requires that borrowers cannot obtain financing on reasonable terms from conventional sources. In practice, this is satisfied by demonstrating that the business's application to conventional lenders was declined, or that conventional financing would impose unreasonable conditions. Most alternative lenders and some banks will provide a declined letter that satisfies this requirement.

The SBA 7(a) closing timeline

The most important thing to communicate to clients pursuing SBA financing is the timeline. SBA deals do not close in days or weeks — they close in months. The 60–90 day range is realistic for a complete, well-organized application at a PLP lender with delegated SBA authority. Complex transactions, real estate-secured loans, or deals that require SBA headquarters review can take 90–120 days or longer.

Phase	Typical Duration	What Happens
Document collection and package preparation	1–3 weeks	Tax returns, financial statements, business plan, SBA forms, projections gathered and organized
Lender credit review	1–3 weeks	Lender underwrites the deal, may request additional information, issues term sheet or commitment letter
SBA authorization (non-PLP lender)	2–6 weeks	Lender submits to SBA for authorization; SBA reviews and issues loan authorization (SBA 1234)
SBA authorization (PLP lender)	3–5 days	PLP lender issues SBA authorization under delegated authority — significantly faster
Closing preparation	1–2 weeks	Lender prepares loan documents, title work (if real estate), UCC searches, insurance requirements
Loan closing and funding	1–3 days	Borrower signs documents; funds disbursed to borrower or to seller/lien holder

For clients who need capital urgently — bridge financing while waiting for SBA to close, seasonal capital needs that cannot wait 60+ days, or immediate equipment purchases — alternative lending products can serve as a bridge while the SBA application processes. ISOs who understand this bridge strategy serve clients more completely than those who treat SBA and alternative lending as mutually exclusive options.

SBA vs. alternative lending: when each is the right recommendation

One of the most important skills for any commercial finance broker is knowing which product is right for which client. The table below provides a practical framework for recommending SBA versus alternative lending based on the business's situation.

Factor	Recommend SBA 7(a)	Recommend Alternative Lending
Time in business	2+ years with documented financials	Under 2 years or no tax returns yet
Owner credit score	650+	Under 620 or recent derogatory items
Amount needed	$250,000–$5 million	$10,000–$500,000 (alternative is faster)
Time to funding	Can wait 60–90+ days	Needs capital in days or weeks
Cost sensitivity	Highly cost-sensitive; low rate essential	Can absorb higher cost in exchange for speed/access
Use of proceeds	Real estate, business acquisition, long-term equipment	Working capital, inventory, short-term bridge
Business profitability	Profitable with documented cash flow	Revenue-based; profitability less critical
Documentation quality	2–3 years of clean tax returns available	Bank statements sufficient; limited tax documentation

The right recommendation is always client-specific. A business owner who has been in business for 5 years, has strong profitability, a 700 credit score, and needs $800,000 for a property purchase should absolutely be guided toward SBA — the economics of the SBA loan are so superior to any alternative product at that size and profile that recommending alternatives first would be a disservice. Conversely, a business owner who needs $75,000 in working capital by next week to cover payroll during a slow period is not an SBA candidate regardless of their credit score — the timeline makes SBA irrelevant for that need.

Working with SBA preferred lenders

Building an SBA referral program requires at least one relationship with an SBA Preferred Lender Program (PLP) lender. PLP lenders have delegated authority from the SBA to approve and close SBA loans without individual authorization from SBA headquarters — which is what makes the 30–45 day closing possible at PLP institutions versus the 60–90+ day timeline at non-PLP lenders.

Finding the right SBA PLP lender to work with as a referral partner requires understanding what they look for in referral sources:

Referral quality over volume. SBA lenders are not looking for high-volume ISO referral sources the way MCA funders are. They want referral partners who send qualified candidates — businesses that genuinely meet SBA eligibility criteria and arrive with organized documentation. Sending pre-screened, qualified SBA candidates makes you a valuable referral partner; sending everything-and-see-what-sticks makes you a noise source the lender will deprioritize.
Clear fee disclosure from the start. Before introducing any client to an SBA lender, have the referral agreement in place with the fee and disclosure terms documented. Do not place a client with an SBA lender and try to add a referral fee after the fact — the lender cannot accommodate this without proper upfront documentation and borrower consent.
Set realistic expectations with clients. Clients you refer to SBA lenders will be entering a process that takes months and requires significant documentation. Set these expectations before the introduction so the client knows what to expect. A client who is surprised by the SBA process — the timeline, the documentation requests, the scrutiny — will blame their advisor for not preparing them. A client who was accurately briefed will proceed with confidence.
Know when to involve the lender early. Some SBA deals have complexity that requires lender input early in the process — unusual business structures, specific use of proceeds questions, or industries that require SBA approval. Calling your SBA lender contact early on complex deals prevents you from spending weeks preparing a package the lender cannot approve under SBA guidelines.

SBA deal documentation

SBA 7(a) applications require significantly more documentation than alternative lending submissions. If you are acting as a referral partner, the SBA lender will drive the documentation collection process. If you are packaging the deal, you are responsible for assembling this package. Either way, understanding what is required helps you set client expectations and pre-qualify deals before investing significant time in the process.

Business financials

Three years of business federal income tax returns (or two years for younger businesses). Current year-to-date profit and loss statement and balance sheet. Three months of business bank statements. Aging accounts receivable and payable schedules if applicable. Business debt schedule showing all existing loans, payments, and payoff amounts.

Personal financials

Three years of personal federal income tax returns for each owner with 20%+ ownership. Personal financial statement (SBA Form 413). Government-issued photo ID. Personal credit authorization. Personal debt schedule. Some lenders also require a personal resume demonstrating industry experience for certain loan purposes.

Business legal documents

Business license and registration. Articles of incorporation or organization. Operating agreement or bylaws. Franchise agreement if applicable. Executed purchase agreement for acquisition transactions. Lease agreements for business premises. Evidence of any professional licenses required for the business type.

SBA-specific forms

SBA Form 1919 (borrower information form) for each owner and key principal. SBA Form 912 (statement of personal history) if applicable. SBA Form 159 (fee disclosure and compensation agreement) for any broker, agent, or consultant being paid in connection with the loan. These forms are mandatory and must be completed accurately.

Collateral documentation

SBA requires that lenders take available collateral up to the loan amount. Real estate appraisal if property is involved. Equipment appraisals for significant equipment. Lien searches on all collateral. Title insurance for real estate transactions. For some loan sizes and purposes, collateral requirements may be limited or waived by the lender.

Business plan and projections

Not all SBA applications require a formal business plan, but most lenders require 2–3 years of financial projections for startups or expansion loans. Established businesses applying for working capital or refinancing may not need projections. When projections are required, they should be supported by historical performance and realistic assumptions.

For more on commercial finance product placement across the full product range including SBA, see our guides on ISO commission structures and building a lender panel. To refer an SBA-eligible deal through the Axiant Partners network, submit at axiantpartners.com/match.

FAQ

Questions about placing SBA loans as a broker

Can an ISO broker earn a fee on an SBA 7(a) loan?

Yes, but fees are regulated by SBA guidelines. A referral partner who introduces a business to an SBA lender without packaging the application earns a referral fee of up to 1% of the funded loan amount. Brokers who package applications earn a packaging fee subject to SBA limits. All fees must be disclosed in writing to both the borrower and the lender before closing. Operating outside these disclosure rules creates regulatory risk for both the broker and the lender.

What is the difference between an SBA referral, broker, and packager?

A referral partner introduces the business and earns a regulated fee without involvement in the application. An SBA loan broker actively assists the borrower in finding the right lender and program, with a more advisory role and disclosed fees. An SBA loan packager prepares the complete application package — forms, financials, projections, supporting documents — and charges a disclosed packaging fee. These roles have different fee limits and disclosure requirements under SBA guidelines.

How long does an SBA 7(a) loan take to close?

SBA 7(a) loans typically take 60–90 days from complete application submission to funding. PLP lenders with delegated SBA authority can sometimes close in 30–45 days. Complex transactions — real estate acquisitions, business purchases, deals requiring additional SBA review — can take 90–120+ days. Set this expectation with clients from the initial conversation so they understand the timeline before committing to the SBA process.

What businesses qualify for SBA 7(a) loans?

Qualifying businesses are for-profit U.S. entities that meet SBA small business size standards for their industry, have 2+ years of operating history, demonstrate ability to repay from operating cash flow, have owner credit scores typically 650+, have no active bankruptcy, and have exhausted or cannot access conventional financing on reasonable terms. Startups, passive investment businesses, gambling operations, and certain other business types are ineligible.

When should a broker recommend SBA versus alternative lending?

Recommend SBA when the business qualifies (2+ years, profitable, good credit), needs a larger amount ($250k–$5M), can wait 60–90 days, needs long repayment terms, or is acquiring real estate or a business. Recommend alternative lending when the business needs funds quickly, has credit or documentation issues that preclude SBA, needs a smaller amount, is less than 2 years old, or cannot produce the documentation SBA requires. The right recommendation is always driven by the specific client situation, not broker income preference.

Do SBA brokers need to be licensed?

There is no federal SBA-specific broker license. However, SBA rules require that all broker and referral fees be disclosed in writing to both the borrower and the SBA lender before the loan closes, and fees must comply with SBA guidelines. Some states have commercial finance broker registration requirements that may apply. SBA lenders are required to report any broker fees they know about to the SBA as part of the loan file. Operating without proper disclosure creates regulatory exposure for both broker and lender.

Have an SBA-eligible client?

Work with Axiant Partners

If you have a client who qualifies for SBA financing — or who needs working capital now while SBA closes — Axiant Partners places deals across the full product range, from same-day MCA to SBA referrals. Submit the deal or review the referral agreement to get started.

Become a Referral Partner Review the Referral Agreement ISO Lending Overview