SBA loans rates

Advertisement SBA Loan Rates – Current Interest Rates and How They Work

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sba-loan-ratesAs mentioned in our Ultimate Guide to SBA Loans, there are two primary types of SBA loans: 7A loans and CDC / 504 Loans. SBA 7A loans can be used for a variety of purposes, while CDC / 504 loans are specifically for the purchase of real estate.

January 2016 Maximum interest rates on SBA 7A Loans range from 5.75% to 8.25%. Full Table

January 2016 Maximum interest rates the CDC portion of CDC / 504 Loan currently range from 3.78% to 4.39% including fees.

Before reading further, make sure you are qualified. The 4 general requirements for getting an SBA loan of any type are:

In business at least 2 years
Personal credit score is 660+
Seeking at least $30,000
At least $100,000 in revenues for the past 12 months
Don’t meet these qualifications? Check out our Complete Overview of Small Business Financing Options.

If you do meet these requirements, and are interested in applying for an SBA Loan, we recommend checking out SmartBiz. They are the best company we have found at providing quick turnarounds on SBA loan approvals, and you can find out how much you qualify for in 5 minutes.

Current SBA (7A) Loan Interest Rates and Explanation

The Small Business Administration (SBA) sets the maximum interest rates that banks can charge on 7A loans. The current maximum interest rate ranges from from 5.75%  – 8.25%, depending on the size of the loan and the amount being borrowed.

The maximum interest rates on SBA 7A loans are also based on market interest rates. As market interest rates change, so will the maximum interest rates on these loans.


Maximum Interest Rates on SBA 7A Loans for January 2016

Use our Free SBA Loan Calculator To Find Out Exact Interest Rates

Loan Size

Less Than $25K

$25k – 50K

Over $50K

Standard 7a

(Repayment Term Less Than 7 Years)

7.75%

(3.50% base rate + 4.25% markup)

6.75%

(3.50% base rate + 3.25% markup)

5.75%

(3.50% base rate + 2.25% markup)

Standard 7a

(Repayment Term 7 Years or Greater)

8.25%

(3.50% base rate + 4.75% markup)

7.25%

(3.50% base rate + 3.75% markup)

6.25%

(3.50% base rate + 2.75% markup)

* Please note SBA 7A Express loans carry a higher interest rate for similar size amounts and terms than the standard 7A loans above. We recommend avoiding SBA Express loans as firms like SmartBiz can provide approval for the standard 7A with similar turnaround times.

Detailed SBA 7(a) Interest Rate Explanation

As the table above shows, the  maximum interest rate on SBA 7(a) loans is based on three factors:

A base rate (one of the following publicly available interest rate measures): Prime Rate,  LIBOR (one month)  + 3.0%, SBA Peg Rate
The term of the loan: Less than 7 years or greater than 7 years.  For example, 3 and 5 year loans would all fall into the same category of under 7 years.
The size of the loan: Under $25,000, $25,000 to $49,999, and over $50,000. For example, loans of $30,000 and $45,000 will fall under the same category.
As the table shows, loans longer than 7 years have a maximum interest rate which is half a percent higher than similar size loans that are for terms that are less than 7 years.

Loans for more than $50,000 have 1% lower maximum interest rates than loans between $25,000 and $49,999 when taken for similar terms. Similarly, loans for $25,000 to $49,999 have 1% lower maximum interest rates than loans for less than $25,000.

Fixed vs. Variable SBA Interest Rates

7A loans can have a fixed or variable interest rate.  With a fixed rate loan, the loan interest rate remains constant throughout the life of the loan. With a variable rate loan, the loan’s interest rate can change (often referred to as a reset) at regular intervals, such as quarterly or monthly.

With variable rate SBA 7A loans, the rate is reset based on one of three publicly available market interest rate numbers, plus a fixed percentage. The interest rate must always be at or below the maximum interest rate set by the SBA. For smaller size SBA loans (for example those under $500,000), banks tend to offer only variable rate loans, with interest rates at or close to the maximum allowable by the SBA. Advertisement