Key Insight
Closing costs are included in the total project cost for SBA purposes — which means they increase the required equity injection. Many buyers forget this and arrive at closing short on cash.
What's Included in Closing Costs
Buyer's legal fees: Acquisition attorney review of purchase agreement, due diligence, and closing documentation. Typically $5,000-$20,000 depending on deal complexity.
SBA lender fees: Origination fee (SBA guarantee fee on 7(a) loans is 2-3.5% of the guaranteed portion), packaging fees, wire fees. Significant — the SBA guarantee fee on a $900K loan can be $15,000-$25,000.
Third-party costs: QoE report ($8,000-$25,000), business appraisal ($2,500-$5,000 if required), environmental assessment ($1,500-$3,500 if applicable).
Title and escrow fees: For deals involving real property; varies by state and transaction size.
Broker commission: Paid by the seller in most transactions (8-12% of purchase price); buyers don't typically pay broker commissions directly.
Including Closing Costs in Project Planning
For SBA financing, total project cost = purchase price + working capital + closing costs. All three components count toward the equity injection calculation.
Example: $1M purchase price + $80K working capital + $60K closing costs = $1.14M total project cost. Required equity injection (10%): $114K. A buyer who only planned for $100K in equity injection ($1M × 10%) arrives $14K short.
What Sellers Pay
Sellers typically pay the broker commission and their own legal and accounting fees. Buyers bear their own advisory costs, lender fees, and third-party diligence expenses.
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