Last update:
The maximum interest rates a bank can charge for an Small Business Administration (SBA) loan depends upon the loan program, loan amount, and loan term. Most SBA loans fall under the SBA’s 7(a) loan or the 504 loan programs. SBA 7(a) loans can be used for a wide variety of purposes, and our post SBA Loan Programs at a Glance may lead you to the 7(a) loan program that is just right for your business. The SBA’s 504 loan program for limited to purchases of fixed assets and real estate.
Current SBA loan interest rates
The SBA sets a maximum rate that SBA lenders may charge for their loans. SBA lenders are free to charge lower than the maximum rate for their loans, and most lenders do just that. Maximum interest rates depend on the principal amount of the loan and whether the loan is a variable- or fixed-rate loan. There are two components to the maximum interest rate: the base rase plus the allowable spread. For the base rate, almost all SBA lenders utilize the prime rate of interest, which is set by the Federal Reserve and fluctuates from time to time. The allowable spread is a fixed amount over the prime rate that banks are allowed to charge for SBA loans, and the allowable spread is set by SBA. The allowable spread rarely changes.
Fixed versus Variable Interest Rates for 7(a) loans
Rates for SBA 7(a) loans may be fixed or variable over time. With a fixed-rate loan, the interest stays the same until the loan is paid off or retired. For variable-rate loans, the interest rate may change periodically over time but the variable rate may not exceed the maximum allowed rate as set by the SBA. Banks prefer variable-rate loans to reduce interest rate risks especially in periods where rates are anticipated to fluctuate over time. Since 2020, over 80% of all SBA 7(a) loans issued have been variable-rate loans (the yellow line below).
FR Max – Fixed-rate max loan rate; Variable-rate max loan; Variable-rate actual SBA loan interest rates (for SBA loans created that month); Fixed-rate actual SBA loan interest rates (for SBA loans created that month); Prime rate of interest.
Maximum variable-rate SBA loan interest rates
| Loan Amount | Fixed | + | Prime | Max Rate |
|---|---|---|---|---|
| > $350,000 | 3.0% | 7.50% | 10.5% | |
| $250,001 – $350,000 | 4.5% | 7.50% | 12.0% | |
| $50,001 – $250,000 | 6.0% | 7.50% | 13.5% | |
| < $50,001 | 6.5% | 7.50% | 14.0% |
Maximum fixed-rate SBA loan interest rates
| Loan Amount | Fixed | + | Prime | Max Rate |
|---|---|---|---|---|
| > $250,000 | 5.0% | 7.5% | 12.5% | |
| $50,001 – $250,000 | 6.0% | 7.5% | 13.5% | |
| $25,001 – $50,000 | 7.0% | 7.5% | 14.5% | |
| < $25,001 | 8.0% | 7.5% | 15.5% |
Other Fees and Expenses for SBA 7(a) Loans
In addition to interest charges, a “Guaranty Fee” on the portion of the loan that is guaranteed by the SBA. Typically the SBA will guarantee 75% – 85% depending on the loan. The Guaranty Fee structure depends on the size of the loan. See our Standard SBA 7(a) Loan Guaranty Fee Calculator to calculate the SBA guarantee fee, which most SBA lenders will finance.
SBA Loan prepayment penalty
A fee of .25% is charged for loans of 12 months or less. A prepayment penalty for loans over 15 years may also be assessed during the first 3 years of a loan (5% for year 1, 3% year 2, and 1% during year 3).
Lastly, an ongoing fee of .546% if charged on all 7(a) Loans.