For SBA lenders
Short answer
Lenders must transition existing LIBOR-indexed 7(a) loans to an SBA-approved alternative base rate, typically SOFR, in a timely manner and in accordance with regulatory guidance, notifying the borrower of the change.
With the discontinuation of LIBOR, the SBA requires all lenders to transition any outstanding LIBOR-indexed 7(a) loans to a compliant alternative reference rate, such as SOFR. This transition must be handled in a systematic way, ensuring proper documentation and communication with the borrower to maintain the loan's integrity and SBA guaranty.
A lender has 7(a) loans indexed to 30-day LIBOR. Following SBA guidance, they identify a suitable SOFR-based rate, notify affected borrowers of the upcoming change and new rate calculation, and update loan documents and E-Tran records to reflect the new index.
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
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.
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