Everything You Need to Know About SBA Form 159
What is SBA Form 159?
The SBA 159 is known as the Fee Disclosure Form and Compensation Agreement. As a business owner, you’ll need this form if someone assisted you during the loan application process and was paid a fee from you for their work.
Filling out paperwork for an SBA loan is an extremely complicated process, something you might not have time to do if you’re also running a business. Instead of burying yourself in stacks of paperwork, you might outsource the documentation to a professional agent. If that agent is compensated, the SBA needs to know about it: that’s where the SBA Form 159 comes in.
Why is this form necessary? By disclosing these fees, lenders and agents can’t take advantage of borrowers with unscrupulous charges and fees. If everything is disclosed to the SBA, borrowers are protected, and lenders must be honest and forthright.
Who Needs to Complete SBA Form 159?
As we mentioned above, the SBA 159 is a disclosure form documenting any paid help you received during the loan application process. This disclosure can be broken down into two basic types of payment:
- Agent Compensation
- Referral Fees
The definition of ‘agent’ can be complicated, but it usually refers to a broker, lender, or loan packager paid by the business owner to help complete the loan application process. In some cases, you might have an agent who refers you to a loan servicer, and that agent often receives a referral fee for sending your business to the agency. Even if you didn’t directly pay the agent, that referral fee needs to be disclosed in the SBA 159 form. There are exceptions to this rule, though: if your accountant prepared the necessary financial documents but didn’t actually help you fill out the loan application, you don’t need to disclosure such work. If you have property appraised by an official from the lender (or the government), that also doesn’t meet the requirements for disclosure.
Filling Out SBA Form 159
You must fill out an SBA 159 for each agent or referral used during the application process. For example, if three agents helped you secure your loan, then you must fill out three different SBA 159 forms. Luckily, the form is a short document and shouldn’t take long to complete. Below, you’ll find the steps that you’ll need to take to submit this form:
1. Loan Applicant Name and Business
Once you’ve determined you do in fact need to fill out the SBA 159 form, you’ll have to list your name and the name of your business. If you applied for the loan under your business name, use that in the applicant name box and leave the business name box blank.
2. Agent Agreement and Certification
Your agent will need to fill out this part, listing their job title and services provided to you during the loan application process. Next, the agent will write in the compensation they received and itemize the list of services provided if the compensation exceeds $2,500. Finally, the agent’s signature is required.
3. Applicant and Lender Certification
You’ll need to specify your business loan certifications in this section, which usually means just a signature from you and one other stakeholder in your company. You’ll also need signatures and compensation totals from the lender, or CDC if you’ve applied for a 504 loan.
The SBA does a tremendous job getting capital in the hands of small business owners, but it’s critical not to forget any paperwork that could stall the loan process. The SBA 159 is one of those forms that’s often missed, but just remember: if a third party got paid for helping you with your SBA loan, you likely need to file an SBA 159.
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