For SBA lenders
Short answer
The SBA now permits other base rate options for variable rate 7(a) loans, including Term SOFR and the Wall Street Journal Prime Rate, in addition to the traditional Prime Rate.
To provide flexibility and align with market trends, especially with the discontinuation of LIBOR, the SBA expanded the permissible base rate options. Lenders can now choose from a broader range of commonly used indices for variable rate loans, provided they are publicly available and transparent.
A lender originates a new $1 million 7(a) variable rate loan. Instead of using the traditional Wall Street Journal Prime Rate, the lender opts to use a Term SOFR-based rate plus an allowable spread, offering the borrower a different pricing structure.
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.
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