What Is SBA Form 159?
SBA Form 159 (Fee Disclosure and Compensation Agreement) is the mandatory federal document used to identify, itemize, and disclose all compensation paid to third-party agents—including brokers, packagers, and CPAs—in connection with an SBA 7(a) or 504 loan. Under current SBA SOP 50 10 7 guidelines, form 159 SBA rules require disclosure whether the fee is paid by the applicant or lender, ensuring complete transparency and compliance with statutory fee caps.
Key Takeaways: SBA Form 159 & CPA Referral Fees
- Universal Disclosure: Every fee paid to an intermediary, broker, attorney, or accountant connected to an SBA loan must be reported on Form 159 prior to initial disbursement.
- Broad Agent Definition: Under 13 CFR Part 103, any individual or firm assisting an applicant or lender with packaging, underwriting support, or client referral qualifies as an “Agent.”
- Strict Referral Fee Tiers: Lender-paid referral fees cannot exceed 1.0% on the first $1,000,000, 0.5% on amounts between $1,000,000 and $2,000,000, and 0.25% on amounts exceeding $2,000,000.
- AICPA Code Compatibility: CPAs can legally receive referral commissions for tax and consulting clients with written consent, but AICPA Rule 503 strictly bans referral fees from audit or attest clients.
- Execution Timing: The 159 form must be executed after all agent deliverables are finalized, typically within 10 business days before loan closing.
Form 159 Eligibility, Scope, and Agent Definitions
Under 13 CFR Part 103 and SBA Standard Operating Procedures (SOP 50 10 7), an agent is broadly defined as any third party who represents, assists, or advises an applicant or lender throughout the financing lifecycle. This encompasses loan packagers, accountants, business brokers, and commercial mortgage intermediaries. When comparing loan programs such as SBA 7(a) vs 504 owner-occupied real estate or evaluating debt under choosing the right commercial financing for your property goals, identifying who qualifies as an agent ensures that all parties maintain federal compliance.
The Small Business Administration established the 159 form to protect small business owners from predatory pricing, undisclosed markup, and fee-splitting abuses. Federal regulations distinguish between two separate payment mechanisms:
- Lender-Paid Referral Fees: Paid directly by the SBA-approved lender out of its own operating capital to compensate an agent for referring a vetted borrower. These payments cannot be passed on to the borrower through higher interest margins, closing fees, or premium charges.
- Applicant-Paid Packaging Fees: Billed directly to the borrower for hands-on application preparation, including business plan writing, debt-service coverage ratio (DSCR) modeling, historical tax reconciliation, and document assembly.
Agent Roles and Form 159 Disclosure Comparison
| Agent Role | Primary Services Rendered | Payer / Source of Fee | Regulatory Cap & Thresholds | Mandatory Signatures |
|---|---|---|---|---|
| Referral CPA | Client identification, preliminary debt capacity assessment, lender introduction | SBA Lender | Capped by SOP 50 10 7 tiered schedule (1.0% / 0.5% / 0.25%); prohibited on attest clients | Applicant, Lender, CPA Agent |
| Packaging Agent | Application compilation, financial model reconciliation, business plan drafting | Borrowing Applicant | Must reflect actual hours worked at market rates; itemized hourly log required if over $2,500 | Applicant, Lender, Packaging Agent |
| Commercial Mortgage Broker | Lender matching, debt structuring, term sheet negotiation, closing management | Lender or Applicant (never both) | Prohibited from collecting dual fees; governed by lender caps or packaging fee reasonableness | Applicant, Lender, Broker Agent |
Can a CPA Legally Accept an SBA Referral Fee?
Yes, a CPA can legally accept an SBA referral fee on both 7(a) and 504 loan transactions, provided the compensation complies with federal SBA regulations, state accountancy board rules, and the AICPA Code of Professional Conduct. Federal guidelines do not bar accounting professionals from earning introduction commissions; rather, they require total transparency and ban double compensation for the same scope of work.
Before executing a referral agreement or signing Form 159, CPAs must verify compliance across four primary regulatory checkpoints:
- AICPA Rule 503 (Attest Engagement Prohibition): CPAs are strictly prohibited from receiving a commission or referral fee from any client for whom the firm provides an audit, review, financial statement compilation relied upon by third parties, or examination of prospective financial information. Collecting a referral fee on an attest client compromises professional independence.
- Tax, Advisory, and Consulting Clients: For clients where the CPA provides only tax preparation, routine payroll, fractional CFO work, or advisory services, referral fees are fully permissible under federal rules, provided the CPA makes a prior written disclosure to the client.
- State Accountancy Board Requirements: State licensing bodies (such as those in California, Texas, New York, and Florida) impose specific client consent requirements. Many require a standalone disclosure document signed by the client prior to lender introduction.
- Insider Disqualification (13 CFR § 103.4): An agent cannot collect an agent fee or referral commission if they serve as a director, officer, partner, employee, or major equity holder in the borrowing entity.
When working with clients acquiring properties with an SBA 7(a) loan for commercial real estate or fulfilling SBA commercial real estate down payment requirements, we structure advisory engagements so that referral revenues and accounting service invoices remain distinct and defensible.
SBA Form 159 PDF Download and Line-by-Line Instructions
To execute the agreement, lenders and agents utilize the official SBA Form 159 PDF available directly through the Small Business Administration’s document repository. Submitting an outdated or incomplete draft can delay loan disbursement and trigger audit findings with the SBA’s Fiscal and Transfer Agent (FTA).
The form is broken down into five distinct sections, each requiring precise documentation:
| Form Section | Field Identifier | Filing Protocol & Compliance Requirements |
|---|---|---|
| Header | Loan Name & SBA Loan Number | Input the exact legal name of the borrowing entity and the official 10-digit SBA loan authorization number assigned in E-Tran. |
| Block 1 | Applicant Business Information | Provide operating entity address, Employer Identification Number (EIN), and principal guarantor contact information. |
| Block 2 | Agent Information | Detail the legal business name of the CPA firm, broker, or packager, along with their EIN, address, and primary contact details. |
| Block 3 | Itemized Services Rendered | Specify the agent classification (Referral Agent, Packager, or Broker). If charging the applicant, attach a detailed invoice itemizing specific hours, hourly rates, and work deliverables. |
| Block 4 | Total Compensation Summary | Break out compensation between Column A (Applicant-paid fees) and Column B (Lender-paid referral fees). Total all columns to reflect aggregate agent compensation. |
| Block 5 | Certifications & Signatures | Tripartite execution: The Applicant confirms no side payments exist; the Agent warrants all services were completed within federal caps; and the Lender verifies regulatory conformity. |
Block 3 requires defensible itemization whenever an applicant is billed directly. Generic descriptions such as “consulting services” or “loan facilitation” are regularly flagged by SBA quality review teams. A compliant packaging entry should read: “12.5 hours at $200/hr reconciling three years of balance sheets, organizing tax returns, and constructing debt-schedule models ($2,500 total applicant fee). Separate $8,500 lender referral fee paid per written agreement.”
SBA SOP 50 10 7 Compensation Limits and Fee Caps
Under SBA SOP 50 10 7, lender-paid referral fees are governed by a mandatory tiered compensation schedule calculated against the gross approved loan amount:
- Tier 1 (First $1,000,000): Capped at a maximum of 1.0% of the net loan amount.
- Tier 2 ($1,000,001 to $2,000,000): Capped at 0.5% on the tranche exceeding $1,000,000.
- Tier 3 (Above $2,000,000): Capped at 0.25% on the remaining balance over $2,000,000.
Worked Example: Fee Caps Across Deal Sizes
The table below illustrates the maximum lender-paid referral fee an agent or CPA can legally earn across two representative SBA deal sizes:
| Calculation Metric | Transaction A: $1,500,000 SBA 7(a) Acquisition | Transaction B: $3,500,000 SBA CRE Loan |
|---|---|---|
| Tier 1 Base (1.0% up to $1M) | $1,000,000 × 1.0% = $10,000 | $1,000,000 × 1.0% = $10,000 |
| Tier 2 Tranche (0.5% $1M–$2M) | $500,000 × 0.5% = $2,500 | $1,000,000 × 0.5% = $5,000 |
| Tier 3 Tranche (0.25% over $2M) | N/A ($0) | $1,500,000 × 0.25% = $3,750 |
| Maximum Lender Referral Ceiling | $12,500 | $18,750 |
| Applicant-Paid Packaging Threshold | $2,500 standard threshold without audit scrutiny | $5,000 cap requiring comprehensive hourly log |
Brokers and referral agents should also note that Certified Development Companies (CDCs) have specific operating guidelines for 504 debentures. Commercial intermediaries working on 504 financing can reference our SBA 504 CDC referral agreement guide for commercial brokers for detailed CDC-specific contracting requirements.
Form 159 SBA Compliance Pitfalls and Audit Flags
When lenders submit loan packages to the SBA, Form 159 is heavily scrutinized during guarantee reviews and secondary market securitizations. Avoiding common compliance traps protects both the agent’s compensation and the lender’s federal guarantee:
- Prohibited Dual Compensation: An agent cannot charge the applicant a packaging fee and simultaneously collect a lender referral fee for the identical scope of work. Each fee must correspond to distinct, verifiable services.
- Premature Signing: Signing a blank or partially completed 159 form prior to the conclusion of services violates federal regulations. The form must reflect actual final numbers and be executed prior to disbursement.
- Unreasonable Packaging Hourly Rates: While referral fees follow fixed statutory tiers, packaging fees charged to borrowers must reflect fair market rates. Charging excessive hourly rates ($500+/hour for routine data entry) can prompt an SBA review and force fee disgorgement.
- Undisclosed Affiliated Entities: If an agent or broker owns an equity stake in a packaging service or referral firm that collects fees on the transaction, all corporate relationships must be explicitly noted.
Frequently Asked Questions About Form 159
What triggers the requirement to execute SBA Form 159?
An SBA Form 159 is required whenever an applicant or lender pays compensation to any third party—such as a commercial loan broker, packager, accountant, or legal counsel—for assistance with preparing, referring, or packaging an SBA 7(a) or 504 loan.
Can a CPA bill the applicant and collect a lender referral fee on the same transaction?
A CPA cannot be paid twice for the same service. However, a CPA can legitimately invoice the borrower for professional accounting work (such as preparing financial statements or projections) while separately receiving a lender-paid referral fee for introducing the client, as long as both amounts are itemized and disclosed on Form 159.
Where can I find the official SBA Form 159 PDF?
The current SBA Form 159 PDF can be downloaded directly from the official SBA.gov document library or provided by your participating SBA Preferred Lender (PLP).
When must SBA Form 159 be submitted to the SBA?
The form must be completed and signed by the applicant, agent, and lender after all services are performed and before loan closing. The lender retains the executed document in the credit file and transmits the data electronically through SBA E-Tran at the time of initial loan disbursement.
Partner With Thorne CRE on Fully Compliant SBA Debt
Navigating federal agency compliance while safeguarding client relationships requires experienced capital advisory support. At Thorne CRE, we work alongside business owners, commercial mortgage professionals, and CPAs nationwide to structure compliant SBA 7(a) and 504 loan packages. Whether you need assistance structuring an owner-occupied purchase or verifying intermediary compensation guidelines, contact our team to discuss your financing objectives.