SBA loan basics
Short answer
SBA 7(a) loan interest rates are negotiated between the borrower and the lender, but they are subject to maximum limits set by the SBA. These limits are typically tied to a base rate plus a spread.
The SBA mandates that lenders use either the Prime Rate, LIBOR (for certain loans), or the WSJ Prime Rate as a base rate, and then add a permissible spread. The maximum allowable spread depends on the loan amount and repayment term, ensuring rates remain reasonable for small businesses.
If the Prime Rate is 8.5%, and the SBA allows a maximum spread of 2.75% for a specific loan size and term, the lender cannot charge more than 11.25%. The borrower might negotiate a rate of Prime + 2.25% (10.75%).
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 2026-06-13. 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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