For SBA lenders
Short answer
Variable interest rate adjustments are determined by the fluctuations in the selected base rate (e.g., Prime or SOFR) and occur at specified intervals, typically monthly, quarterly, or semi-annually, as outlined in the loan authorization.
The loan authorization specifies the base rate (e.g., Wall Street Journal Prime Rate, 1-month Term SOFR) and the frequency of adjustments. The actual interest rate is calculated by adding the fixed lender's spread to the current base rate on each adjustment date.
A loan is set at Prime + 2.00%, with quarterly adjustments. On January 1st, Prime is 7.50%, making the rate 9.50%. On April 1st, if Prime drops to 7.25%, the rate will adjust to 9.25% for the next quarter.
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
7(a) Alternative Base Rate Options
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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