For SBA lenders
Short answer
The SBA currently approves the Wall Street Journal Prime Rate, the 1-month London Interbank Offered Rate (LIBOR) prior to its cessation and now its replacement Secured Overnight Financing Rate (SOFR), and the SBA Peg Rate as base rate options.
For variable rate 7(a) loans, the interest rate is tied to a permissible base rate plus a spread. Lenders can choose from several SBA-approved base rates. While LIBOR was a historical option, it has been replaced by SOFR. The SBA Peg Rate is an alternative base rate published quarterly by the SBA, providing another option for lenders. The chosen base rate must be clearly disclosed in the loan authorization.
A lender offers a variable rate 7(a) loan with an interest rate of Prime + 2.75%. The Wall Street Journal Prime Rate is the chosen base rate, and the interest rate adjusts whenever the Prime Rate changes.
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 2026-06-13. 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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