For SBA lenders
Short answer
Alternative base rates, such as SOFR, must be publicly available, outside the lender's control, and published on a regular schedule, with spreads adjusted to be comparable to Prime-based loans.
With the transition away from LIBOR, the SBA has approved alternative base rates like SOFR (Secured Overnight Financing Rate). Lenders using an alternative rate must ensure it is transparent, independent, and regularly published. The maximum allowable spreads (e.g., 2.25% for loans over $50,000) still apply, but lenders must ensure the 'all-in' rate for the alternative base rate plus spread is comparable to a Prime-based loan.
A lender wishes to offer 7(a) variable rate loans using 30-day Average SOFR. They must ensure SOFR is publicly available, that their spread (e.g., 5.00% for an all-in rate) is within SBA limits, and that the combined rate is reasonable and competitive, comparable to Prime-based rates for similar loans.
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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