SBA rules · SOP 50 10 8.1
What is the maximum interest rate on an SBA 7(a) loan?
The maximum allowable interest rate for an SBA 7(a) loan depends on the loan size and whether the rate is fixed or variable, with variable rate spreads over base rates capped between 3.0% and 6.5%.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- Variable rate loans: For loans using the Prime Rate or SBA Optional Peg Rate, the maximum spread above the base rate is 6.5% for loans of $50,000 or less, 6.0% for loans of $50,001 to $250,000, 4.5% for loans of $250,001 to $350,000, and 3.0% for loans of $350,001 and higher.
- Alternative base rates: When using an Alternative Base Rate (SOFR, 5-year Treasury, or 10-year Treasury), the total combined rate cannot exceed Prime plus the allowable spread corresponding to the loan size tier.
- Fixed rate loans: Fixed rates are negotiated up to a maximum rate published periodically by SBA in the Federal Register, which is set at the Prime rate in effect on the first business day of the month plus an allowable spread over Prime.
- Express loans: For SBA Express and Export Express loans, lenders may use their own commercial base rates and may assess default interest rates, provided the rate throughout the loan term does not exceed SBA's maximum allowable rate.
- Export Working Capital Program (EWCP): SBA does not prescribe fixed or variable interest rate maximums for EWCP loans, but monitors negotiated rates for reasonableness.
The source
What the SOP says
“The allowable spread when using the base rate (i.e., prime rate or SBA Optional Peg) is determined by the loan amount. Loans of $50,000 and less: Base rate + 6.5%; Loans of $50,001 up to and including $250,000: Base rate + 6%; Loans of $250,001 up to and including $350,000: Base rate + 4.5%; Loans of $350,001 and higher: Base rate + 3%.
“When using an Alternative Base Rate, the maximum interest rate (Alternative Base Rate plus spread) is determined by the loan amount with a cap based on the Prime interest rate. Loans of $50,000 and less: Prime + 6.5%; Loans of $50,001 up to and including $250,000: Prime + 6.0%; Loans of $250,001 up to and including $350,000: Prime + 4.5%; Loans of $350,001 and higher: Prime + 3.0%.
“A loan may have a fixed or variable interest rate. The maximum interest rate that may be established for any 7(a) loan is governed by SBA’s regulations on interest rates, which preempts any provisions of a state’s constitution or law. The Lender negotiates the interest rate with the Applicant, subject to SBA’s maximum allowable rates.
“SBA will periodically publish the maximum allowable fixed interest rate in the Federal Register. The maximum allowable fixed interest rate will be the Prime rate in effect on the first business day of the month, plus an allowable spread over Prime, as set forth in the most recent Federal Register Notice.
“SBA’s maximum allowable interest rate applies both to the initial Note rate on a variable rate loan and to the combined rate that is obtained by adding the spread to either the base rate or Alternative Base Rate as outlined in Appendix 18: 7(a) Interest Rate Requirements.
“SBA does not prescribe the interest rates for the EWCP but will monitor these rates for reasonableness. 13 CFR § 120.344(c)
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This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.