SBA Form 159: What It Is, and Why It Matters So Much
SBA Form 159 Overview and Instructions
There are few things you can count on as a small business owner—but one thing that’s for sure is paperwork, especially if you’re applying for an SBA loan. Applications for these highly coveted business loans not only require a long list of documents from your personal financial records, but also include their own specific forms, too. Among them is SBA Form 159, which you’ll need to get your SBA loan approved and underwritten.
If you’re going at it alone, though, making sure that you have every form you need, and that they’re all filled out correctly, is crucial. We’ll go through SBA Form 159 specifically so you can feel confident you’re acing this specific part of your SBA loan application. (And hint: Once you’re done here, we can help you out with SBA Form 912, too—but one thing at a time!) Here’s all you need.
What SBA 159 Is, and When You Need to Fill It Out
If you’re applying for an SBA loan, you’ll come across SBA Form 159, also interchangeably referenced as “SBA 159.” This form is only three pages long, and is essentially a compilation of signatures and contact information. But it’s still dense. The important part of Form 159 is disclosing any fees being paid to a third party agent “for any matter involving SBA assistance.” You want to make sure you get it right.
Arguably, the hardest part of Form 159 is deciding if you even need to fill it out. If you hired someone—an attorney, a broker, a loan packager—to help you with your SBA loan, you’ll need to fill out 159. The form is only required by about a third of SBA loan applicants, but you may be part of that third. If you are, it’s still simple—no matter what, there’s nothing to worry about.
How to Tell If You Need to Fill out Form 159
You need this form if you’ve used what the Small Business Administration dubs an “agent.” Deciding on this is the most nuanced part. Also, this applies to both SBA 7(a) loans and SBA 504/CDC loans. You’ll have to fill out a specific form depending the type of loan program you’re applying for—you can find 159s for SBA 7(a) loans here and 159s for SBA 504 loans here.
Who Counts as an SBA Loan Agent?
An agent is “any party that receives compensation from representing an applicant or lender in connection with an SBA loan.”
Great! Wait, what?
If it sounds confusing, it kind of is. Most simply, loan packagers, referral agents, brokers, attorneys, accountants, or consultants who were somehow compensated to help you prepare your loan fall under the category of “agent” and must be reported on SBA 159. They don’t just have to be people you paid; so, for instance, if you went through an intermediary service who helped match you with a lender, and and the lender paid them a referral fee, you’ll need to fill out this form, too.
Not every single person who works on your loan application, though, is considered an agent and needs to be reflected on SBA Form 159. The SBA has specified certain people who don’t qualify as agents. These are the exclusions:
- Applicant’s accountant for the preparation of financial statements required by the Applicant in the normal course of business and not related to the loan application
- A state-certified or state-licensed appraiser employed by the Lender to appraise collateral in connection with the SBA loan
- A lender service provider operating under an SBA-approved lender service provider agreement
- An individual employed by the Lender to perform a business valuation in connection with the SBA loan
- An environmental professional employed by the lender to conduct an environmental assessment of the collateral in connection with the SBA loan
- A real estate agent who is receiving a commission for the sale of real estate in connection with the SBA loan
- Any attorney in connection with the 7(a) loan closing
Plus, direct costs associated with document preparation in connection with the loan closing do not need to be reported in this form.
Do You Need to Fill Out SBA 159? 2 Questions to Ask Yourself
Using the info above, ask yourself these two questions:
1. Did you, the applicant, hire someone to help you fill out your application?
- If “yes”, is that person listed on the exempt agent list?
- If “no”, are you paying that person?
- Then yes, fill out SBA Form 159
- If “no”, are you paying that person?
If you have any other combo of answers for this question, then this case doesn’t apply to you.
2. Did you, the applicant, use a loan broker or intermediary service to apply to your loan?
- If “yes”, will the lender compensate the broker or intermediary for the referral?
- Then yes, fill out SBA Form 159
Again, if you have any other combo of answers, Question 2 doesn’t apply to you. If the scenarios in both Q1 and Q2 don’t apply to you, then you don’t have to fill out SBA 159.
But if this is you, it’s really not so bad! If you worked with a combination of agents and non-agents to finalize your SBA loan, make sure that you fill out the appropriate forms for the people who do qualify as agents—and remember that each agent you worked with gets their own form.
What Else You’ll Need to Fill out SBA Form 159
As with any paperwork, staying organized will be key; keep some kind of record as you go along of who will require a form, so that when it comes time to fill them out and file them, you have all the info ready to go. You’ll be so happy that you thought ahead to streamline the process if you have the chance.
Once you’ve determined if you need SBA Form 159 and how many you’ll have to fill out, there are just a few things you’ll need to fill it out successfully:
- Think back to if you filled out SBA Form 1919. If you did and answered “yes” to question 10, which asks if you used or were intending to hire someone to help with your loan, then you’ll need to fill out Form 159 to declare what you ended up spending.
- Along with the list of any and all agents you used, and how much you paid each of them, you’ll need the business and representative name for each agent, including their full contact info
- The loan applicant’s authorized representative’s name (if needed; it might not be, as we’ll specify below)
- If your agent charged you more than $2,500, you’ll need an itemized list (including a breakdown of hourly expenses and fees) from each agent—you don’t need anything if it was less than this
There’s nothing else, we promise.
The form itself is very easy to fill out; we’ll walk you through all the steps below, but as you go you’ll just need to make sure you’re meticulous and filling out all the boxes correctly.
According to findings from a study released by the SBA Inspector General, loan applicants submitted 51,000 filings of Form 159 between 2010 and 2014, and 37% of those contained errors.[1] Yikes. Some contained missing or invalid loan numbers, no compensation or referral fee recorded, incomplete lender agent or compensation recorded, or a combination of multiple errors. Making sure that you double check that you’ve filled everything out, and filled it out correctly, will save you trouble later on.
Form 159: A Step-by-Step Breakdown
Most of the sections on SBA 159 are fairly straightforward. They ask for names and contact info, and fee amounts, which hopefully you’ve kept track of as you went. But even the simplest of forms have some tricks, so we’ve broken it down for you section by section.
The loan applicant (you, probably), your agent, and your lender all have a section to fill out on this form. As we’ve said, the SBA reports seeing lots of errors here, so if you have someone else fill out a section for you, make sure you verify it before you send it off.
Loan Applicant Name
The only trick here will be making sure that the applicant name matches the name on your SBA loan application and on any federal tax forms. If you used your personal name on those forms, use your personal name here. But if you filed out those documents using your business’s name, use that on this form. Make sure the applicant name you use matches across all your forms, so they can be found easily.
Agent’s Agreements and Certifications
Your agent will fill out this section—but as we said, you should verify the information they provide before filing the form. They’ll declare the type of agent they are and the services they provided to you (loan packaging, etc.) and the total compensation amount they charged to you.
Here is where you might need that itemized list that was mentioned above; if the total amount charged is upwards of $2,500, your agent must provide you an itemized schedule of their expenses. Then the agent will print and sign their name and provide their full business contact information.
Applicant’s Certifications
Just as we’ve been saying it’s important to verify all information provided on this form, the SBA wants to make sure you looked it over before you sent it off. In the Applicant’s Certifications section, the SBA wants to make sure that “the above representations and amounts … are satisfactory to the applicant.”
One thing to watch out for here: if the Applicant name on the form is your own personal name, you do not have to fill out the authorized representative box. But, if the Applicant’s name on this form is your business’s name, you’ll need an authorized officer from your company to sign as the authorized representative. Again, just make sure the names match on all forms.
Lender’s Certifications
This is the last thing! Your lender will fill out this section for you, and by now you know that you should double check it for them. This section requires the lender name, plus the printed name and signature of the lender’s authorized representative. Also you’ll need the name and full business contact information of the referral agent, and any referral fee paid. At the very end, you’ll need your SBA Loan Number if your loan has been approved.
A note for 504/CDC loans: On your form, the lender certification is replaced with a “CDC Certification” section. That’s because the Certified Development Companies (the CDC) will certify any agents used. Sometimes, the CDC may act as a referral agent to a third party lender; if this is the case, make sure that the CDC also discloses any fees it received from this third party lender.
Making sure that all this information—your agent’s names and business info, the fee amounts, especially your SBA Loan Number—is correct will ensure that you only need to fill out Form 159 once, and will make the rest of the process go more smoothly.
SBA Form 159 Matters Even More Than You Think
Sure, filling out SBA 159 might seem like an unnecessary step. But disclosing these fees helps keep the total loan cost down, keeping the SBA’s mission of helping small businesses find affordable business loans.
Transparency and full disclosure also helps the SBA prevent fraud, and prevent lenders from taking advantage of their loan applicants. The same study cited above also included that since 2005, the Inspector General has reported at least 22 cases of loan agent fraud, totalling more than $300 million. By reporting all the fees you paid to loan agents, you can help make sure that lenders aren’t taking advantage of you or your fellow small business owners.
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