For SBA lenders
Short answer
The Wall Street Journal Prime Rate is not mandatory as a base rate for variable rate 7(a) loans. Lenders have several alternative base rate options available, provided they are publicly available and transparent.
SBA rules allow for various publicly available, recognized base rates for variable rate 7(a) loans, including the Wall Street Journal Prime Rate, LIBOR (for legacy loans still being transitioned), and several alternative options specified in recent guidance (e.g., SOFR, Term SOFR). Lenders are not mandated to use Prime Rate but must choose a base rate that is widely recognized, publicly available, and accurately reflects market conditions. The chosen base rate, along with the permissible spread, must be clearly stated in the loan agreement.
A lender is preparing a variable rate 7(a) loan. Instead of the Wall Street Journal Prime Rate, they opt to use the 30-day Term SOFR as the base rate, as it is an approved alternative. The lender documents the choice and its publicly available nature in the loan file.
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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