For SBA lenders
Short answer
Beyond the Prime Rate, permitted alternative base rate options for 7(a) variable-rate loans include the Term SOFR (Secured Overnight Financing Rate) and the WSJ Prime Rate, depending on lender preference and market availability.
The SBA allows lenders flexibility in choosing an appropriate, widely published base rate for variable-rate loans. Historically, Prime Rate was most common, but recent changes have expanded options to include Term SOFR, which is a forward-looking term rate based on SOFR. Lenders must clearly state the chosen base rate in the loan authorization and loan documents.
A lender previously used the Wall Street Journal Prime Rate for all variable-rate 7(a) loans. After reviewing market conditions and internal capabilities, the lender decides to offer Term SOFR as an alternative option, ensuring their loan system can accurately track and adjust rates based on the chosen Term SOFR index.
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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