{"ok":true,"canonical_url":"https://dealroom.so/for-lenders/questions/if-a-lender-wishes-to-use-sofr-as-a-base-rate-for-a-variable-rate-7-a-loan-what-specific-d","api_url":"https://dealroom.so/api/public/questions/if-a-lender-wishes-to-use-sofr-as-a-base-rate-for-a-variable-rate-7-a-loan-what-specific-d","question":"If a lender wishes to use SOFR as a base rate for a variable rate 7(a) loan, what specific documentation is required?","topic":"Base Rates","audience":"lender","bot_mode":"lender","short_answer":"Lenders must ensure the loan authorization clearly specifies SOFR as the selected base rate and that the promissory note incorporates appropriate SOFR conventions, including a spread and fallback provisions as outlined by SBA guidance.","rule":"The SBA has approved alternative base rates like SOFR for variable rate 7(a) loans. Lenders must adhere to specific documentation requirements, including clearly stating the chosen base rate in the loan authorization and the promissory note, along with the applicable spread and any necessary fallback language to ensure clarity and compliance.","example":"A lender proposes a variable rate 7(a) loan using 30-day Average SOFR + 3.00% as the interest rate. In the E-Tran system, the lender selects SOFR as the base rate option. The final Loan Authorization and Promissory Note must explicitly state '30-day Average SOFR' as the base rate, define the calculation method, and include the 3.00% spread, consistent with SBA guidance.","what_lenders_check":"Lenders must precisely document the chosen base rate and its mechanics in the loan documents to avoid ambiguity or non-compliance. Any deviation from SBA-approved base rate conventions could jeopardize the guaranty.","required_facts":["SOFR base rate","Loan authorization specification","Promissory note conventions","SBA guidance on base rates"],"source_families":["SOP 50 10 - Lender and Development Company Loan Programs","7(a) Alternative Base Rate Options","13 CFR Part 120 - Business Loans"],"official_sources":[{"title":"SOP 50 10 - Lender and Development Company Loan Programs","url":"https://www.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx"},{"title":"7(a) Alternative Base Rate Options","url":"https://www.sba.gov/sites/default/files/2026-02/Procedural%20Notice%205000-875051-%207%28a%29%20Alternative%20Base%20Rates.pdf"},{"title":"13 CFR Part 120 - Business Loans","url":"https://www.ecfr.gov/current/title-13/chapter-I/part-120"}],"related_questions":[{"question":"How does a lender determine which alternative base rate to use for a variable rate 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/how-does-a-lender-determine-which-alternative-base-rate-to-use-for-a-variable-rate-7-a-loa"},{"question":"What are the acceptable alternative base rate options for variable-rate 7(a) loans, besides the Wall Street Journal Prime rate?","url":"https://dealroom.so/for-lenders/questions/what-are-the-acceptable-alternative-base-rate-options-for-variable-rate-7-a-loans-besides-"},{"question":"How should a lender handle the transition of an existing variable-rate 7(a) loan from LIBOR to an alternative base rate?","url":"https://dealroom.so/for-lenders/questions/how-should-a-lender-handle-the-transition-of-an-existing-variable-rate-7-a-loan-from-libor"},{"question":"What are the specific notification requirements for a lender when adjusting the interest rate on a variable rate 7(a) loan?","url":"https://dealroom.so/for-lenders/questions/what-are-the-specific-notification-requirements-for-a-lender-when-adjusting-the-interest-r"},{"question":"What alternative base rate options are available for variable rate 7(a) loans?","url":"https://dealroom.so/for-lenders/questions/what-alternative-base-rate-options-are-available-for-variable-rate-7-a-loans"},{"question":"What are the current alternative base rate options for variable rate 7(a) loans, besides Prime Rate?","url":"https://dealroom.so/for-lenders/questions/what-are-the-current-alternative-base-rate-options-for-variable-rate-7-a-loans-besides-pri"}],"related_terms":[{"term":"Variable-rate 7(a) loan","url":"https://dealroom.so/glossary/variable-rate-7-a-loan"},{"term":"Base rate","url":"https://dealroom.so/glossary/base-rate"},{"term":"Variable rate","url":"https://dealroom.so/glossary/variable-rate"},{"term":"7(a) loan","url":"https://dealroom.so/glossary/7a-loan"},{"term":"SOFR-based rate","url":"https://dealroom.so/glossary/sofr-based-rate"},{"term":"Alternative base rate","url":"https://dealroom.so/glossary/alternative-base-rate"}],"related_tools":[{"name":"SBA 7(a) payment & fee calculator","url":"https://dealroom.so/sba-7a/calculator"},{"name":"Find an active SBA 7(a) lender","url":"https://dealroom.so/lenders"}],"data_freshness":{"last_reviewed":"2026-06-14","sba_rule_sources_checked_through":"2026-06-14"},"citation":{"label":"DealRoom.so SBA 7(a) Q&A","url":"https://dealroom.so/for-lenders/questions/if-a-lender-wishes-to-use-sofr-as-a-base-rate-for-a-variable-rate-7-a-loan-what-specific-d","source_type":"DealRoom Q&A"},"caveats":["Grounded in the current SBA rulebook; verify against official sources before relying on it for a live deal.","Not legal, tax, or financial advice and not an approval decision."]}