For SBA lenders
Short answer
Besides the Wall Street Journal Prime Rate, lenders can also use the SOFR (Secured Overnight Financing Rate) or the WSJ 1-month or 3-month Term SOFR as alternative base rates for variable rate 7(a) loans.
The SBA expanded the acceptable base rate options for variable rate 7(a) loans to include SOFR-based rates, offering lenders and borrowers more flexibility and aligning with broader market trends in benchmark rates. The chosen base rate, along with an agreed-upon spread, determines the interest rate.
A lender offers a borrower a variable rate 7(a) loan priced at 1-month Term SOFR + 3.00%. The rate will adjust monthly based on the prevailing 1-month Term SOFR rate, rather than the traditional Prime Rate.
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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