These rates consist of:

• Base rate: This is a published rate, which is the WSJ Prime in the case of SBA loans. This rate fluctuates according to the broader financial market.

• Spread: On top of the base rate, lenders can add an additional percentage to increase the overall interest rate, depending on the loan amount and its maturity.

Thus, the SBA 7(a) loan rate is essentially a combination of these two components.

Small Business Loan Rates: Comparison

SBA 7(a) Loan Interest Rates by Loan Amount

Interest rates for the SBA 7(a) loan depend on the amount of the loan. They’re divided into three groups:

Loan Amount	Maturity of less than 7 years	Maturity of more than 7 years
$25,000 or less	WSJ Prime rate + 4.25%	WSJ Prime rate + 4.75%
$25,001 to $50,000	WSJ Prime rate + 3.25%	WSJ Prime rate + 3.75%
$50,001 and up	WSJ Prime rate + 2.25%	WSJ Prime rate + 2.75%

Base Rates

Factors Influencing the SBA 7(a) Loan Rates

While the loan amount and maturity play a significant role, other factors can also influence your interest rate. These include:

• Creditworthiness: As with most other types of loans, a higher credit score often translates to a lower interest rate.
• Economic conditions: In periods of economic downturn, interest rates might be lower to stimulate borrowing and investment.
• Lender's discretion: While the SBA sets the maximum rates, individual lenders might offer more competitive rates to attract borrowers.

Why Are SBA 7(a) Loan Rates Typically Lower Than Other Business Loans?

The government backing of SBA 7(a) loans significantly reduces the risk for lenders, making them more willing to offer loans at competitive rates. Additionally, the rate structure established by the SBA ensures that these loans remain affordable for small business owners.

Tips to Secure a Better Rate

1. Improve your credit score: Before applying for a loan, take steps to boost your credit score. This might include paying down debts, ensuring no errors on your credit report, and building a longer credit history.
2. Shop around: Don't settle for the first rate you're offered. Different lenders might offer different rates, so it pays to shop around and negotiate.
3. Consider a longer maturity: If feasible for your business, opting for a longer-term loan can secure a lower interest rate.
4. Provide collateral: Secured loans, or those backed by an asset, often have lower interest rates since they present less risk to lenders.

How Much Will My SBA Loan Payments Be?

Curious to know exactly what you're getting into with an SBA loan? Enter your loan amount, interest rate, and term into our calculator. It will seamlessly provide your monthly and annual payments — so you know exactly what you can afford.

Uses for Different Small Business Loans: Comparison

Loan Name	Valid Uses	Invalid Uses
SBA 7(a) Standard Loan	Expansion Renovation Vacant land Building purchases Startup costs Equipment and fixtures Working capitalInventory Seasonal line of credit Refinancing debt	Paying off inadequately secured creditors Expenses for nonprofits or any business in the following industries: speculation, lending, investment, rental real estate, gambling
SBA 7(a) Small Loan	All from 7(a) Standard list	All from 7(a) Standard list
SBA 7(a) Express Loan	All from 7(a) Standard List Revolving line of credit	All from 7(a) Standard list
SBA 7(a) CAPLines Loan	Short-term, cyclical, revolving and non-revolving working capital Consolidation of short-term debts	All from 7(a) Standard list Long-term expenses
SBA 7(a) Export Working ⁠Capital Program Loan	Short-term, cyclical, revolving and non-revolving working capital for export transactions	All from 7(a) Standard list Expenses for non-export businesses
SBA 7(a) Export Express Loan	Export business expenses	All from 7(a) Standard list Expenses for non-export businesses
SBA 7(a) Veterans ⁠Advantage Loan	All from 7(a) Standard list	All from 7(a) Standard list
SBA 504 Loan	Building purchases Land Renovation Heavy equipment	All from 7(a) Standard list Costs not directly attributable to, or necessary for, the project

Related Questions

What is the current SBA 7(a) loan interest rate?

The current SBA 7(a) loan interest rate is WSJ Prime + 2.75% for loans of $50,001 and up, WSJ Prime + 3.75% for loans of $25,001 to $50,000, and WSJ Prime + 4.75% for loans of $25,000 or less. The Current prime rate is 8% as of May 2023.

Source: SBA 7(a) Loan Interest Rates by Loan Amount and SBA Express Loan Interest Rates

What are the eligibility requirements for an SBA 7(a) loan?

The eligibility requirements for an SBA 7(a) loan include:

• The business must meet the SBA's size standards for its particular industry.
• The business must have fewer than 500 employees and less than $7.5 million in revenue each year for the previous three years.
• The business must physically be based in the U.S. and operate within the U.S. and its territories.
• The business must operate for profit.
• Business owners must first have used other sources of financing, including personal funds, in order to qualify.
• Businesses must not be involved in lending, real estate, or speculation.
• Your business must operate for profit. Nonprofits and not-for-profit businesses are not eligible.
• You must also have some equity in the business — this could mean you already have a profitable business, or you could use your own personal equity as collateral.
• If you have any alternative financial resources, you must have used them first. For example, if you have a personal savings account or are able to get a personal loan, then you must first pursue those options before applying for an SBA 7(a) loan.
• The business owner cannot be on parole.
• You must be doing business in the U.S. or its territories.

What are the advantages of an SBA 7(a) loan?

The advantages of an SBA 7(a) loan include:

• Highly competitive, low interest rates
• Long loan terms, up to 25 years
• Fixed and variable-rate options are available
• A variety of businesses are eligible
• Low down payments, typically around 10-20%
• Variety of loan options, including SBA 7(a) express loans, SBA 7(a) CAPLines
• Most SBA loans, including 7(a) loans are fully amortizing, meaning borrowers don’t have to worry about balloon payments

What are the disadvantages of an SBA 7(a) loan?

SBA 7(a) loan disadvantages include:

• Lengthy approval times (for standard SBA 7(a) loans)
• Lots of documentation
• Collateral is often required
• Certain businesses, including real estate investing, lending, gambling, and speculation are prohibited
• High credit scores are typically required (typically 680+)
• May be restrictions on supplemental/additional financing

Source: www.sba7a.loans/sba-7a-loans-small-business-blog/pros-and-cons

Source: www.commercialrealestate.loans/blog/difference-between-sba-7a-and-sba-504-in-cre

How long does it take to get approved for an SBA 7(a) loan?

The length of time it takes to get approved for an SBA 7(a) loan depends on the type of loan processing used. Standard 7(a) loan processing takes between 7-10 business days, while Certified Lenders Program (CLP) processing takes only 3 business days.

For more information, please see the following sources:

• How Long Does it Take to Approve an SBA 7(a) Loan?
• How to Fill Out Paperwork for the SBA 7(a) Loan

In this article:
1. Current SBA 7(a) Loan Rates
2. Understanding the SBA 7(a) Loan Rate Structure
3. Small Business Loan Rates: Comparison
4. SBA 7(a) Loan Interest Rates by Loan Amount
5. Base Rates
6. Factors Influencing the SBA 7(a) Loan Rates
7. Why Are SBA 7(a) Loan Rates Typically Lower Than Other Business Loans?
8. Tips to Secure a Better Rate
9. How Much Will My SBA Loan Payments Be?
10. Uses for Different Small Business Loans: Comparison
11. Related Questions
12. Get Financing