For SBA lenders
Short answer
Besides the Wall Street Journal Prime rate, permissible alternative base rate options for variable-rate 7(a) loans include the Term SOFR (Secured Overnight Financing Rate) or the WSJ Prime successor index identified by the Alternative Reference Rates Committee (ARRC).
SBA policy allows for variable interest rates on 7(a) loans, tied to an approved base rate plus a permitted margin. Historically, the WSJ Prime rate was standard. With market shifts, the SBA has approved alternative indices like Term SOFR to provide lenders with flexibility and maintain alignment with broader financial markets, especially following the discontinuation of LIBOR.
A lender is originating a $1,000,000 7(a) variable-rate loan. Instead of tying the interest rate to the WSJ Prime, the lender chooses to use the 30-day Term SOFR as the base rate, adding a permitted margin (e.g., Term SOFR + 2.75%) as outlined in the loan authorization.
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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