Business Loan Closing Costs: What to Expect in 2025

When applying for a business loan, many owners focus on interest rates, loan amounts, and repayment terms — but forget about one important detail: closing costs.

Just like with a mortgage, business loans come with fees you’ll need to pay when the loan is finalized. These costs can add up quickly and significantly impact your total borrowing cost. Understanding what they are — and how to plan for them — ensures there are no surprises when you close on your loan.

This guide breaks down the most common business loan closing costs in 2025, how much you can expect to pay, and smart ways to minimize them.

Why Closing Costs Matter

Closing costs are the one-time fees and charges you pay to secure your business loan. They’re usually due when the loan is finalized (the “closing”) and can range from 1% to 6% of the total loan amount.

For example, on a $500,000 loan, you could pay anywhere from $5,000 to $30,000 in closing costs. That’s why understanding and budgeting for them is crucial before signing on the dotted line.

Typical Business Loan Closing Costs

While every lender structures fees differently, most business loans include some or all of the following:

1. Origination Fee

• Charged by the lender for processing and approving the loan.

• Typically 0.5% to 3% of the loan amount.

• Sometimes deducted from the loan proceeds instead of paid upfront.

2. Application Fee

• Covers the cost of reviewing and underwriting your application.

• Can range from $100 to $500.

3. Packaging Fee

• Charged by lenders (especially SBA lenders) for preparing your loan application and documentation.

• Usually $2,000 to $5,000 depending on loan size and complexity.

4. Credit Check Fee

• A small fee to pull your business and personal credit reports.

• Typically $25 to $150.

5. Appraisal and Valuation Fees

• Required if your loan involves real estate or collateral.

• Commercial property appraisals can range from $2,000 to $10,000+.

6. Environmental Reports (if applicable)

• For real estate loans, lenders may require environmental assessments.

• Costs range from $500 to $2,000.

7. Legal Fees

• Some lenders charge legal or documentation fees for preparing contracts.

• Can range from $1,000 to $5,000.

8. SBA Guarantee Fees (For SBA Loans)

• If you’re taking out an SBA 7(a) loan, you’ll pay a guarantee fee to the SBA.

• Fees vary but are usually 2% to 3.75% of the guaranteed portion.

9. UCC Filing Fees

• Covers filing a Uniform Commercial Code lien against your business assets.

• Usually $100 to $300.

Average Total Closing Costs by Loan Type

Here’s what you can generally expect to pay depending on the type of loan:

• Traditional Bank Term Loan: 1% – 3% of the loan amount

• SBA 7(a) Loan: 2% – 5% (including SBA guarantee fee)

• SBA 504 Loan: 3% – 5% (includes third-party fees)

• Equipment Financing: 1% – 2.5%

• Commercial Real Estate Loan: 3% – 6%

For larger, more complex loans — especially those involving property — total closing costs can exceed $25,000 or more.

Steps to Estimate and Budget for Closing Costs (Featured Snippet Section)

1. Ask your lender for a detailed fee breakdown early

2. Add 1%–6% of your loan amount as an estimate

3. Set aside cash reserves or adjust your borrowing amount

4. Compare lenders’ fee structures before choosing

5. Negotiate fees when possible to reduce costs

Tips to Reduce Business Loan Closing Costs

While closing costs are standard, you can take steps to minimize them:

• Shop around for lenders: Some banks and online lenders charge significantly lower origination or legal fees.

• Negotiate fees: Especially with larger loans, lenders may be willing to waive or reduce some costs.

• Bundle services: Using the same lender for multiple services (e.g., banking, credit lines) can lead to discounts.

• Use SBA loan programs: Although SBA loans have guarantee fees, they often come with lower overall costs than private loans.

• Factor fees into your total loan request: Borrow slightly more to cover costs so they don’t affect working capital.

How Closing Costs Affect APR and Total Loan Cost

Closing costs don’t just impact your upfront costs — they also affect your Annual Percentage Rate (APR), which reflects the total cost of borrowing, including fees.

For example:

• Loan amount: $250,000

• Interest rate: 7%

• Closing costs: $10,000

While the stated interest rate is 7%, your effective APR will be higher once you include those closing costs. That’s why it’s essential to look beyond the interest rate and calculate the total cost of capital.

What to Ask Your Lender Before Signing

Before you accept any loan offer, make sure you understand exactly what you’re paying for. Ask your lender:

• What are all the fees associated with this loan?

• Are any of these negotiable?

• Can I roll the fees into the loan amount instead of paying upfront?

• How will these costs affect my total repayment amount and APR?

Conclusion: Plan Ahead for a Smooth Closing

Closing costs are a normal part of the business financing process — but too many owners overlook them until it’s too late. By understanding what fees to expect, budgeting for them in advance, and negotiating when possible, you can avoid surprises and keep your total borrowing costs under control.

With careful planning, you’ll not only secure the funding your business needs but also ensure you’re getting the best deal possible in 2025 and beyond.