An Overview Of SBA Loan Interest Rates

SBA loans can be an incredible financial resource for business owners who want to grow or sustain their companies. Understanding SBA loan interest rates is an important part of determining just how helpful this type of financing can be, since costs vary based on many different factors. Explore the most popular SBA loan programs and their rate structures to find out which one is the best fit for your company.  







How SBA Loan Interest Rates Work



SBA loan rates are regulated by the U.S. Small Business Administration. Private lenders negotiate their own rates with each individual borrower. But the offered loan rate cannot exceed the maximum set by the SBA for each loan program. 



The maximum is tied to a base rate, which can be one of the following:




Prime rate



LIBOR rate



Optional peg rate




In most cases, however, you’ll find that lenders use a prime rate as the base rate. The borrower is then charged a percentage over that base rate. That amount depends on the loan amount, type of SBA loan, and the loan maturity date. 





Current SBA Loan Rates



Here is how each SBA interest rate breaks down, based on the loan program and other details. 







SBA 7(a) Loan Rates



SBA 7(a) loans can be used for general working capital needs and have interest rates that can either be variable or fixed. Fixed rates have a higher premium but never change, even if the base rate increases over time. SBA 7(a) rates range from 2.25% to 8% above the base rate. Use the following table to compare rates for different loan sizes and term lengths.







SBA 7(a) Loan Amount Maximum Fixed Rate Maximum Variable Interest Rate For Maturity Under 7 Years Maximum Variable Interest Rate For Maturity Over 7 Years $25,000 or less Base rate + 6% + additional 2% Base rate + 4.25% Base rate + 4.75% $25,000 to $50,000 Base rate + 6% + additional 1% Base rate + 3.25% Base rate + 3.75% $50,000 to $250,000 Base rate + 6%  Base rate + 2.25% Base rate + 2.75% $250,000+ Base rate + 5%  Base rate + 2.25% Base rate + 2.75%







SBA 504 Loan Rates



SBA 504 loans are designed to purchase assets that help with job creation or business growth, such as new facilities, machinery, or renovating an existing property. These loans are available through certified development companies (CDCs) and offer fixed interest rates.



You can apply for either a 10-year or a 20-year repayment period. The SBA 504 rates are incrementally pegged above the current rates for 5-year and 10-year U.S. Treasury issues. The rate typically totals 3% of the loan amount. 







SBA Microloan Loan Rates



Microloans from the SBA help newer small businesses with startup or expansion costs. Borrowers can get approved for up to $50,000, although the average loan size is $13,000. The maximum repayment term is six years. Expect SBA microloan rates to range from 8% to 13%. 







SBA Express Loan Rates



SBA Express loans allow for a shorter approval time, so you can get faster access to capital. In fact, you’ll get an initial response within 36 hours. The maximum loan amount is capped at $500,000 and rate maximums are broken down into the following two categories:




$50,000 or less: Prime rate + 6.5%



$50,000+: Prime rate + 4.5%








SBA Community Advantage Loan Rates



The SBA Community Advantage loan program was created to help businesses in underserved markets. These loans are capped at $350,000. Interest rates are negotiated by the lender but are subject to the SBA’s maximums of:



Prime rate + 6.5% for loans $50k or less



Prime rate + 6% for loans $50k-$250K



Prime rate + 4.5% for loans $250k-$350k







Economic Injury Disaster Loan Rates



Economic Injury Disaster Loans (EIDL) are available to small businesses, agricultural cooperatives, and most nonprofit organizations located in a declared disaster area. The loans have no interest accrual for the first 12 months with no pre-payment penalties. Interest rates for these loans can’t exceed 4%.








Typical SBA Loan Fees



In addition to paying interest on SBA loans, borrowers may also pay fees both up front and annually, throughout the loan term. The fee depends on the loan amount. 







Upfront Fee



This fee is based on the approved loan amount, including both the guaranteed and the unguaranteed portions.







Loans With 12-month Maturity or Less Loan Amount Fee  $500,000 or less 0% $500,001 or more 0.25% of the guaranteed portion







Loans With More Than 12-month Maturity Loan Amount Fee  $500,000 or less 0% $500,001 to $700,00 0.55% of the guaranteed portion $700,001 to $1,000,000 1.05% of the guaranteed portion $1,00,001 to $5,000,000 3.5% of the guaranteed portion up to $1,000,000, plus 3.75% of the guaranteed portion over $1,000,000







Ongoing Fee



Lenders may also charge an ongoing service fee for SBA loans over $500,000. The fee amounts to 0.55% of the guaranteed portion of the outstanding loan balance.








Frequently Asked Questions







What is the current SBA loan rate?





SBA loan rates vary depending on a number of factors, including the type of SBA loan, the size, and the maturity date. The current prime rate (as of February 2, 2023) is 7.75%. That means SBA 7(a) loan rates can range anywhere between 10% and 15.75% depending on your loan terms.










Are SBA loans interest-free?





There are no interest-free SBA loans. Direct lenders will always charge interest on SBA loans. During the early days of the COVID-19 pandemic, there was some temporary relief passed for business owners with existing SBA loans. This allowed for the SBA to pay for six months of principal, interest, and fees for borrowers with 7(a), 504, or microloans. However, the cutoff date was for loans approved by September 27, 2020.










Are SBA loans fixed rate?





An SBA loan could come with either a fixed rate or a variable rate. The interest rate structure varies depending on which one you pick. Compare loan offers from multiple lenders to make sure you have as many options to choose from as possible.














To calculate monthly payments for your SBA loan, visit our SBA loan calculator . Need help finding the best interest rate for your SBA loan or other business term loan?



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Information provided on this blog is for educational purposes only , and is not intended to be business, legal, tax, or accounting advice. The views and opinions expressed in this blog are those of the authors and do not necessarily reflect the official policy or position of Lendio. While Lendio strivers to keep its content up to-date, it is only accurate as of the date posted. Offers or trends may expire, or may no longer be relevant.
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