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SBA Loan Interest Rates
Written By: Misha M., CFA

An SBA loan can be a convenient funding option for your small business. These loans are backed by the Small Business Administration and provide an easy way to get the capital you need at a reasonable rate.

Fluctuating interest rates can profoundly impact the cost of borrowing money for your business. Here are the current interest rates for SBA loans:

Current SBA 7(a) Interest Rates

Current SBA 7(a) loan variable-interest rates are as follows(1):

  • $25,000 or less with a maturity under seven years: Base Rate + 4.25%
  • $25,000 or less with a maturity over seven years: Base Rate + 4.75%
  • $25,0001 to $50,000 with a maturity under seven years: Base Rate + 3.25%
  • $25,0001 to $50,000 with a maturity over seven years: Base Rate + 3.75%
  • $50,001 or more with a maturity under seven years: Base Rate + 2.25%
  • $50,001 or more with a maturity over seven years: Base Rate + 2.75%

For SBA Express loans or Export Express loans, the maximum rate can be significantly higher. This can range from 4.5% to 6.5% over the prime rate, depending on the dollar amount of the loan.

Current SBA 7(a) loan fixed-interest rates are as follows:

  • $25,000 or less: Prime Rate + 6.0% + 2.0%
  • $25,001 to $50,000: Prime Rate + 6.0% + 1.0%
  • $50,001 to $250,000: Prime Rate + 6.0%
  • $250,001+: Prime Rate + 5.0%

What Determines SBA Loan Interest Rates

There are several factors that determine the interest rates that lenders can offer. Ultimately, interest rates are set by the lender you’re working with. This means there can be a variance in the interest rates you will find within certain limits set by the SBA.

Rates are determined by the prime rate, set by the Federal Reserve, plus a lender spread. This means that as the Federal Reserve adjusts the Federal Funds Rate, the interest rates of SBA loans will adapt accordingly.

If you have a loan funded with a variable interest rate, be aware that your payments can change based on the fluctuation of the prime rate.

The type of SBA loan will also play a role in determining the interest rate you pay. SBA Express loans, in which you can receive your funds much quicker than traditional loans, will come with a larger interest rate.

The length of the loan will also impact the rate you are offered. Loans with a maturity date over seven years will come with a more costly rate than those provided for a loan with a maturity date under seven years.

Because of how advantageous they can be, SBA loans can be highly competitive. Research has proven that less than 50% of SBA loans are approved and funded. To increase the chances of approval for your loan, always aim to meet the SBA loan requirements.

How Often Do SBA Loan Interest Rates Change?

Interest rates on SBA loans will change depending on the prime rate set by the Federal Open Market Committee. A “target rate” is set by the FED eight times per year. 

However, because SBA loan rates are partially determined by the individual lender, rates can change daily, so check with a professional lender like Lama Loan to get an accurate rate.

SBA Loan Fees

SBA loan fees are standard to help facilitate the loans and ensure protection for the lender. Fees associated with SBA loans are two-fold – an annual service fee and a guarantee fee.

The fees you pay will ultimately depend on the amount of your loan, the type of loan, and its maturity date.

The service fee is based on the outstanding loan amount.

The guarantee fees are calculated based on the guaranteed portion of the loan, not the total amount.

The dollar amount that is guaranteed will depend on the amount of the loan. For example, loans of $150,000 or less are guaranteed for 85% of the loan. Loans greater than $150,000 are guaranteed for 75% of the loan up to a total of $3.75 million.

For SBA 7(a) loans under $500,000 – you won’t pay any guarantee fees currently.

The upfront fees for SBA 7(a) loans over $500,000 with a maturity date that exceeds 12 months are as follows:

  • $500,001 to $700,000: .55% of the guaranteed portion 
  • $700,001 to $1 million: 1.05% of the guaranteed portion 
  • $1 million+: 3.5% of the guaranteed portion of up to $1 million plus 3.75% of the guaranteed portion over $1,000,000

The upfront fees for SBA 7(a) loans over $500,000 with a maturity date under 12 months are as follows:

  • $1 – $499,999: 0%
  • $500,000+: .25% of guaranteed the portion 

While application and origination fees are strictly prohibited, SBA lenders can charge additional fees such as prepayment, closing, and packaging fees which can increase your borrowing costs. Always check with your lender to get a complete understanding of the fees associated with your small business loan.

When Do SBA Loans Mature?

SBA 7(a) loans mature in under ten years for equipment, working capital, or an inventory loan. For real estate, the maximum maturity is 25 years. 

For help calculating your estimated payment on your loan, you can use our SBA loan calculator to get an easy estimate.

Closing Thoughts

The interest rates on SBA 7(a) loans will depend on several factors, including the current prime rate, the lender you work with, and the dollar amount of loan you require.

When it comes to obtaining funding for your business, SBA loans provide a fast and competitive option compared to other funding methods.

While they can be slightly more cumbersome than other methods, they are a convenient way to secure capital for your business needs.

Key Takeaways

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Current SBA loan interest rates start at the base rate + 3% and increase to the base rate plus 6.5% depending on the size of your loan.

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SBA loan interest rates can change often depending on current market conditions. You can check current rates by accessing the SBA’s website here.

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