For SBA lenders
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.
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.
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.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
7(a) Alternative Base Rate Options
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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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