For SBA lenders
Short answer
For variable rate 7(a) loans, lenders currently have the option to use the Wall Street Journal Prime Rate, the London Interbank Offered Rate (LIBOR) for existing loans (with a transition plan), or the Secured Overnight Financing Rate (SOFR).
The SBA permits lenders to price variable rate 7(a) loans using several accepted base rates. While Prime Rate is most common, the SBA has adopted SOFR as a LIBOR alternative for new loans, aligning with broader market transitions away from LIBOR. Lenders must select a transparent and widely published base rate.
A lender structures a variable rate 7(a) loan. They can choose to peg the interest rate to the Wall Street Journal Prime Rate (e.g., Prime + 2.75%), or they can use the SOFR index plus an agreed-upon margin. The choice is typically made based on market conditions and lender preference.
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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