It is my first time working through the SBA loan process. I have a term sheet from a lender, but am mildly concerned that they are asking for an up-front packaging fee that is (in part) refundable if the loan is not approved. There is already a significant amount of equity in the broker's escrow account. The language of the term sheet is below -- seems odd to me that a lender is asking for a borrower to essentially cover their costs up front.

Anyone have thoughts?

"to process your loan request, you agree to pay us a packaging fee of $2,500. This fee shall be refunded, less any out of pocket expenses incurred by us if we are unable to approve the loan on the terms outlined. If we approve your loan request as outlined, the fee will be non-refundable."