The SBA Manufacturing Fee Waiver

Short answer: If you are buying a manufacturer this year, SBA is effectively paying part of your closing costs. For fiscal 2026, which began October 1, 2025, SBA waived the upfront guaranty fee entirely on 7(a) loans of $950,000 or less to qualifying small manufacturers, and waived both the upfront and annual service fees on 504 loans to manufacturers with no cap on loan size. Most buyers, and frankly many lenders, have not priced this in. For an owner acquiring in the industrial trades, it is found money sitting in the fee line, and it stacks with the program changes that already favor manufacturers.

What exactly is waived

Two waivers, two programs, per SBA's FY2026 fee relief. On the 7(a) side, the upfront guaranty fee is waived, zero, on loans of $950,000 or less to qualifying small manufacturers, across all 7(a) programs. That fee is normally charged on the guaranteed portion of the loan and financed into it, so on a loan near the cap the waiver is worth tens of thousands of dollars that no longer accrue interest for ten years. On the 504 side the relief is broader: both the upfront fee and the annual service fee are waived, and there is no loan cap. The annual fee otherwise runs for the life of the loan, so the 504 waiver compounds year after year.

Qualifying means the business is classified in NAICS sectors 31 through 33, the manufacturing codes, and meets SBA's size standards. The classification follows the business being financed. A buyer acquiring a machine shop, a metal fabricator, a plastics processor, or a specialty food producer is financing a manufacturer, and the waiver follows.

Why this matters more for acquisitions than it looks

A $950,000 7(a) cap sounds small against a multi-million dollar deal, until you remember that acquisitions are stacks, not single loans. Plenty of manufacturing deals in the lower band put well under $950,000 of 7(a) money to work beside a seller note and the buyer's equity injection. And when the target owns its building, which manufacturers disproportionately do, the natural structure puts the real estate on a 504 and the business on the 7(a). Under the FY2026 waivers that structure is fee-free on both layers.

The 2026 program changes stack on top. Small manufacturers can hold unlimited 504 loans, one per distinct project, alongside their 7(a) access, and the decoupled program caps give a borrower up to $5 million through each program. For an owner running a program of industrial acquisitions, that combination, unlimited project-by-project 504s with waived fees plus preserved 7(a) capacity, is a structural advantage that did not exist two years ago.

How to actually capture it

Confirm the NAICS code first. The waiver turns on the target's classification, and borderline businesses, a fabricator that also installs, a producer with a service arm, deserve a deliberate look at how they are coded before the loan application frames them. Then structure the stack with the waiver in mind: if the deal can be built so the 7(a) piece sits at or under $950,000 with seller financing carrying more of the price, the fee disappears entirely, and the seller note does double duty in the capital stack. Ask the lender to show the fee line both ways. Some quotes still include fees the program no longer charges, and a waiver you do not claim is a waiver you paid.

Fee schedules reset every fiscal year, and this one is a FY2026 posture tied to the current administration's manufacturing push, so treat the window as open now rather than permanent. Verify current fees with your lender at application, and if a manufacturing acquisition is on your board for the next year, the fee math is one more reason to run at it while the waiver holds. Industrials, manufacturing, and distribution are the deepest end of BluGrowth's experience, and structuring the stack to capture program economics like this is Deal Structure work.