SBA loan basics
Short answer
SBA 7(a) loan interest rates are primarily determined by a base rate (like Prime Rate or SOFR) plus a fixed or variable spread, which is negotiated between the borrower and the lender.
The SBA sets maximum allowable interest rates, which are typically tied to a base rate such as the Wall Street Journal Prime Rate, the London Interbank Offered Rate (LIBOR) alternative SOFR, or the SBA Optional Peg Rate. Lenders then add a 'spread' on top of this base rate, which is capped by the SBA and depends on the loan amount and term.
If the Prime Rate is 8.5% and the lender's negotiated spread is 2.25%, the borrower's variable interest rate would be 10.75%. This rate could fluctuate if the Prime Rate changes.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
SOP 50 10 - Lender and Development Company Loan Programs
7(a) Alternative Base Rate Options
Last checked 2026-06-14. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-14 · SBA sources checked through 2026-06-14. 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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