For SBA lenders
Short answer
The loan authorization must clearly specify the chosen base rate (e.g., Prime, WSJ Prime, Term SOFR, or Fixed Spread SOFR) and the margin added to it, ensuring transparency and compliance with SBA requirements.
SOP 50 10 allows lenders to use several base rate options for variable rate 7(a) loans. The chosen base rate, whether Prime Rate or an approved alternative like Term SOFR, must be publicly available and clearly documented in the loan authorization along with the maximum allowable spread. This ensures that the borrower understands the rate structure and the loan remains compliant.
A lender uses Term SOFR as the base rate. The loan authorization will state "Term SOFR + 2.75%" with appropriate reset periods, clearly defining the rate calculation for the borrower and SBA.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Alternative Base Rate Options
SOP 50 10 - Lender and Development Company Loan Programs
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.
More on base rates
Terms in this answer
Pre-qualify your SBA 7(a) deal
Tell us the business, the price, and where you are — we'll point you to the lenders most likely to fund a deal like yours and flag anything that trips up approval.
Free · No documents · Usually same-day