April 29, 2019 8:00 AM PT

SBA Loan Rates

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The current maximum interest rates for SBA 7(a) loans is 7.50% - 10.00%. Your rate will vary based on several factors, including loan type, size, and term. Read on to learn more.

Current SBA Loan Rates

Here are the current rates for some of the SBA's most popular loans, based on terms and amounts borrowed.

Other loans might advertise lower rates. But if your small business would qualify for another loan, you would automatically not be eligible for an SBA loan.

SBA 7(a) loans: These loans are designed for small businesses that need working capital. They have some of the most flexible terms for borrowers.

The base for 7(a) loans is usually based on the prime rate. As of October 2018, the Prime Rate published in the Wall Street Journal is 5.25%.

How Long It Will Take You to Pay Off Your Loan
Loan Amount1-7 years7+ years
Less than $25,000Base + Spread

5.25% + 4.25%
9.5%
Base + Spread

5.25% + 4.75%
8.75%
$25,000-$50,000Base + Spread

5.25% + 3.25%
8.5%
Base + Spread

5.25% + 3.75%
9%
$50,000+Base + Spread

5.25% + 2.25%
7.5%
Base + Spread

5.25% + 2.75%
7.5%

SBA 7(a) Express Loans: These are similar to the SBA 7(a) loans. But they offer a quicker turnaround time. As a tradeoff, their rates are usually higher.

SBA 7(a) Rates
Loan AmountAll Terms
Less than $50,000Base + Spread

5.25% + 6.5%
11.75%
More than $50,000Base + Spread

5.25% + 4.5%
9.75%

CDC/504 Loan Rates: Fixed rate loans for big, physical projects, like expanding or renovating.

CDC loan rates are based on the 5-year and 10-year US Treasury rates. They're difficult to calculate exactly and can change very frequently, but they're currently estimated at:

CDC Rates
Loan TermEstimated Interest Rate
10 years5%
20 years5.25%

SBA Disaster Loans: These have much simpler loan rates. They are also the maximum loan rates—disaster loan rates are usually offered at lower rates. If your business was recently affected by a disaster, shop around.

Can your small business obtain credit elsewhere?Maximum Interest Rate
No4%
Yes8%

SBA Loans: The Basics

Small businesses accounted for 65.9% of all net job creation from 2000-2017. About 80% of them have no employees. But they can have as many as 500.

Often, these businesses have a hard time getting financing. Without significant resources to protect against disaster or keep up with changing technology, they're risky to lenders.

Since they don't typically need to borrow millions of dollars, their loans are less profitable and attractive to banks.

The Small Business Administration (SBA) is an independent agency of the federal government created in 1953. SBA loans offer an avenue to help small businesses get the financing they need to grow.

Is your small business running into financial problems? QuickBridge Funding explains how business tax debt financing can help provide some relief.

These loans range from $500-$5.5 million. They can be tough to get—and they have a lot of requirements. You can learn more about those below.

How Rates Are Calculated

SBA loans are calculated by adding the base interest rate to a spread, which is a markup by the lender to cover their costs and make a profit.

The base rate + the spread = the interest rate you pay.

For traditional loans, lenders can set the spread as high as they want (or as high as the competing bank down the street). But the SBA sets caps for their loans, so lenders are limited to how much interest they can charge.

SBA rate caps vary based on the loan term and the loan type (more on that in a moment). Shorter loan terms can mean higher payments, but lower interest rates.

The loan amount affects the rate, too. Typically, the more money you borrow, the lower the interest, since the lender will potentially make more money on your loan.

Why SBA Loan Rates May Vary

Your SBA loan rate might be different from the rates above, for a few reasons.

  1. SBA 7(a) loan rates are calculated using the prime rate. You may have heard of the Fed Funds Rate or just the phrase, "The Fed raised the rate." This is not the same, but that rate directly influences the prime rate.

  2. Lenders can choose to use a different rate called the One Month LIBOR + 3% rate adjustment. Also called the Inter-Bank Offered rate, this is a very complicated term for a rate that originates in London. It's an alternative to the prime rate, and it can change daily.

  3. Lenders can even go for a third rate, called the SBA Optional Peg Rate. The SBA allows lenders to choose their "peg rate" instead of using the prime rate or the One Month LIBOR.

The SBA 7(a) loan rates here will change as the base rate changes and depending on which base rate your lender uses.

It's up to the lender to choose which base rate they'll use. Base rates can change without warning, so check with your lender to confirm.

SBA Loan Types:

SBA loans can either be fixed rate or variable rate.

  • Fixed Rate: Means you pay one rate over the life of the loan. CDC/504 loans are fixed rate loans.

  • Variable Rate: Means your loan payment can fluctuate as the base rate rises or falls. These loans can sometimes be cheaper, because the lender knows they'll be covered if the base rate jumps.

    The rate can fluctuate every month, every year, or every few years. It's up to you and the lender to negotiate which terms make sense.

    A few more things to know about variable rate loans:

    • To protect borrowers, the rate cannot fluctuate more than once a month.
    • Your lender also cannot set a "balloon" payment—a larger-than-normal payment in the middle of the loan term.
    • Your rate cannot exceed a certain cap, based on the type of loan.

    When applying for a variable rate loan, ask your lender to help you calculate the highest amount you'd pay if rates rise.

Beyond rate, you'll also have to pay fees on your SBA loan, which vary based on the type of loan. Keep reading to learn more.

Fees: The True Cost of an SBA Loan

SBA loan interest rates aren't the only costs you'll need to consider. Each SBA loan comes with fees designed to cover the costs of the lender and of the SBA.

Just like the SBA limits the interest rates lenders can charge, they also limit the fees that lenders traditionally charge. The SBA claims that it prohibits lenders from charging:

  • Processing fees
  • Origination fees
  • Application fees
  • Brokerage fees
  • Bonus points

The SBA DOES allow for guarantee fees, closing costs, and early repayment fees. Only one loan, just for exporters, called the Export Working Capital Loan program, comes with a commitment fee

Guarantee Fee:

The SBA guarantees a portion of the loan. This encourages lenders to take a risk on lending to small businesses. They know that if the business doesn't pay back the loan, the lender can recover some of the funds through the SBA.

The SBA charges the lender a fee to do this. They let lenders pass this guarantee fee on to customers.

Guarantee Fees for 7(a) Loans
Loan AmountGuarantee Fee
$150,000 or Less2% of guaranteed portion
$150,001-$700,0003% of guaranteed portion
$701,000-$1,000,0003.5%
$1,000,000+3.5% on the first $1 million
+ 3.75% of the guaranteed portion over $1 million
Short term loans (any amount) 0.25% of the guaranteed portion

Closing Costs:

Besides the guarantee fee, you'll likely be charged closing cost fees. These can include charges for items like appraisals and title searches. They depend on the needs of your specific loan and your lender.

Early Repayment Fee:

The SBA charges a small early repayment fee based on how much time has passed since the loan amount was paid out.

If you voluntarily prepay 25% or more of the loan's outstanding balance within the first three years after the loan is disbursed (you receive the loan money), you can be charged a fee.

Here's a breakdown:

Time after DisbursementFee
Year One5% of prepayment
Year Two3% of prepayment
Year Three1% of prepayment

This fee only applies for loans with terms of 15 years or longer.

Talk with your lender to ensure you understand all fees associated with your loan.

How SBA Loans Work and Their Benefits

Rate caps can help make SBA loans affordable options for small businesses that wouldn't otherwise qualify for a loan. The caps limit how much interest banks can charge for each loan—meaning a lower cost to borrowers.

SBA Loan Uses

Each type of SBA loan has certain restrictions on how the money can be used. But small businesses can use SBA funds for expenses like:

  • Operating capital
  • Inventory
  • Office supplies
  • Equipment

and more.

Small businesses can also use SBA loans for long-term fixed assets like:

  • Purchasing buildings or land
  • Making improvements to land or buildings, such as adding utilities or developing parking lots
  • Building a new structure
  • Renovating a building
  • Purchasing large items that will be useful for at least 10 years, like machinery and equipment

A good lender can help advise which loans are right for your small business' needs. So choosing the right one is an important step of the process.

Choosing a Lender

If you're considering an SBA loan, you'll need to choose a lender. Be prepared to show the lender why you are a good applicant.

Traditionally, we think of banks as lenders, but other institutions can make SBA loans, too.

Nonprofit lenders: Unlike banks, do not try to make money for shareholders. Instead, they try to help certain communities by lending to small businesses.

Some nonprofit lenders are also microlenders. They lend small amounts of money, anywhere from a few hundred dollars to $50,000.

Tips for Choosing a Lender:

  • Check to see if your lender partners directly with the SBA. "Preferred lenders" can make decisions on certain types of loans without SBA review, which can mean a quicker process

  • Do your homework before choosing a nonprofit lender. Nonprofit lenders usually hook up small businesses with training, counseling and networking. But even if you work with a bank, the SBA can provide those services, too.

    One downside: Nonprofit lenders often depend on donors and grants to get funding, which means less money to loan. It can be harder to get a loan, or the amount of the loan might be limited.

  • Know everyone involved. If you're applying for a CDC/504 loan, you'll need to work with both a bank and a Community Development Company (CDC). Read below for more details about CDC/504 loans.

  • If your business has been hit by a disaster, start online. For SBA Disaster Loans, you can apply online directly on the SBA's website, which can save time.

Prepping for the Loan Process

Once you've chosen a lender, you'll need to prove that you'll use the funds wisely. In other words, be ready to show you can pay back the loan in full and on time.

Even though the SBA designs loans to help small businesses, they can still be tough to land —not every applicant is well qualified.

Each type of SBA loan has certain requirements. In general, applicants:

  • Must own a registered business that operates legally and for-profit in the US or its territories.
  • Be operating for at least two years (though the SBA sometimes lends money to startups)
  • Have a sound business purpose
  • Must understand their finances and how their business makes money.

As an applicant, you should have already invested equity into the business—some of your own time, or your own money.

Before you apply for an SBA loan, it's a good idea to gather documents and plans to show the lender that you're a good candidate. These can include:

A business plan: A good business plan will show how you can make money—essentially repaying the loan. Do you have a plan? You can find templates and assistance on the SBA website.

Industry experience: It's not required, but lenders want to feel confident that you can succeed and pay back the loan.

Your ideal loan amount and purpose Consider how much money you'll need, and exactly how it will help your business.

Financial projections: You'll need to understand your business' finances. Figure out how you'll use the money, and how you'll pay back the loan.

Credit history: Like traditional loans, your credit history can help lenders determine your risk and your interest rates.

Ideal loan type: While a good lender can guide you through the application process, it helps to know which loan you'd like to apply for.

Wondering about different types of business loans? National Funding explains the difference between short-term and long-term business loans and how to know which is right for you.

Which SBA Loan Might Be Right for Your Small Business

The SBA understands that the needs of small business owners vary—from loan amount to ways to use the money.

Different types of loans fit different types of businesses, and the SBA offers a lot of different products. Most businesses that apply for SBA loans start by looking at the 7(a) product line.

While conventional loans may offer lower interest rates, the SBA's rate caps make 7(a) loans a competitive option, and 7(a) loans typically have fewer restrictions than other SBA loans.

Standard 7(a) loan: This type is the most popular option within the 7(a) category. When people say "I got an SBA loan," this is usually what they mean.

It's a multi-purpose loan of up to $5 million. And it's loaded with features.

To qualify for a Standard 7(a) loan over $25,000, you'll likely need to be willing to put up some collateral. Collateral is property you already own and agree that the bank can seize if you don't pay back your loan.

Collateral for the Standard 7(a) loan is based on the amount of your loan. If your loan is greater than $350,000, the SBA requires the maximum collateral possible. In other words, if you want to borrow $400,000, and you own a building valued at $400,000, you will likely need to use your building as collateral.

For the Standard 7(a) loan, the SBA maximum guarantee is 85% for loans up to $100,000, and 75% for loans greater than $150,000. This matters when calculating your loan's guarantee fee.

If your small business needs more flexibility than a lump-sum loan, the SBA allows lenders to add a revolving line of credit for up to 10 years under the CAPLines submissions (see below for more on CAPLines).

7(a) Small Loan: While similar to the Standard 7(a) loan, this one has a few differences. It's called a "small loan" for a reason: the maximum amount is $350,000. Plus, the 7(a) Small Loan is meant for businesses with lower-scale needs, so a revolving line of credit isn't an option.

It also has a few different collateral requirements. While collateral is still based on the loan amount, loans between $25,001 and $350,000 require the lender to use the same collateral procedures they'd use for other similar, non-SBA loans.

For example, if the bank you visit requires full collateral for their standard $50,000 business loan, and you request a $50,000 SBA 7(a) Small Loan, you'll need to put up $50,000 in collateral.

If you don't have that much in collateral, personal real estate, like your house, can also be used, as can trading assets (like stocks).

Collateral restrictions also apply regarding liens against any real estate you own and any assets you buy with the money you've loaned

SBA Express Loan: For businesses that need cash quickly, these loans advertise a fast turnaround time. In fact, the SBA promises a response within 36 hours.

The drawback: the SBA Express loan typically has a higher interest rate than a Standard or Small loan.

Otherwise, it's pretty similar to the Small Loan, with a maximum loan amount of $350,000.

Note just a few more differences:

  • The maximum SBA guarantee for the bank is 50%.
  • A revolving line of credit is possible, for up to seven years with maturity extensions permitted.

Some banks claim they can match or exceed the SBA Express turnaround time. This means you could get a less expensive Standard 7(a) or 7(a) Small loan in the same amount of time. Check with your lender to make sure.

Other SBA 7(a) Loans

  • Export Express: Has a maximum loan amount of $500,000, and the SBA will respond within 24 hours. The rates follow the same formula as the SBA Express loan.

  • Export Working Capital Loan: Offered up to $5 million, it has stricter collateral terms. The rates follow the Standard 7(a) and 7(a) Small Loan rate formula.

  • International Trade: Loans can serve as another option for exporters or for businesses that are hurt by imports to the US. The maximum loan amount is $5 million, and the terms are 10-25 years.

  • Veterans Advantage Loan: 7(a) loan for veteran-owned businesses.

7(a) loans aren't the only loans offered by the SBA. CDC/504 loans help businesses with costs for physical expansions and modernizations. Keep reading to learn more.

CDC/504 Loans: Physical Projects with Community Benefits

While 7(a) loans are often used for working capital, CDC/504 loans are meant for big, physical projects. These include updating a building to meet standards or physically expanding a small business.

Designed to create jobs and help communities, CDC/504 loans follow some of the same guidelines as 7(a) loans. But their structure, term and rates work a little differently.

The SBA works with private lenders (like banks) and Community Development Companies (CDCs) to make CDC/504 loans. There are 260 CDCs set up nationwide, all regulated by the SBA. The best way to locate one is to contact your local SBA office.

Money borrowed with a CDC/504 loan can be used to purchase, renovate or improve on a building or land.

Businesses can also purchase furniture or equipment that is essential to the main project. However, it must be a minor part of the project and have a lifespan of more than 10 years.

CDC/504 loan money can also be used to cover "soft costs," which include administrative fees essential to the project (like title searches, architect fees, permits and surveys).

But the money cannot be used for working capital. Fees can be financed with the loan, including any fees paid to the CDC and the guarantee fee.

If your small business needs working capital, a 7(a) loan or a CAPLine might be the right fit.

CDC/504 loans also CANNOT be used for:

  • Franchise fees
  • Broker fees
  • Advertising
  • On-road vehicles
  • Fees not directly associated with the main project

CDC/504 Loans follow a specific structure:

  • The SBA contributes 40% of the loan.
  • The lender contributes 50%.
  • The borrower usually contributes 10% (sometimes, this can be as high as 20%).

Eligibility:

Your business might be eligible for a CDC/504 loan IF:

  • Your tangible net worth is $15 million or less
  • And your net income for the last two years (after federal taxes) is less than $5 million.

In addition, your loan needs to help your local CDC meet one of their goals to improve the community. CDCs aim to first increase jobs. They even have a formal formula to do it: one added or retained job for every $65,000 of the loan amount.

They also look for projects that will bring new income to the area, revitalize a business district or help rural development.

That can include modernizing an existing building to meet health, safety and environmental standards. CDCs also support small businesses owned by women, minorities and veterans.

If you believe your physical building or expansion project would help improve the community, or if you identify as a woman, minority or veteran, consider a CDC/504 loan.

Contact your local SBA office to find a CDC. Then talk with them to find out how a CDC/504 Loan could help your business and help meet their goals.

Community Advantage:

For businesses in underserved communities, there's one other loan worth noting.

The Community Advantage is part of the SBA's pilot program. Its scope is limited—there are less than 50 approved lenders in the US. But the program pairs small businesses in underserved communities with mission-based lenders.

The maximum loan size is $250,000, with terms ranging from seven to 25 years, depending on how the money is used. This loan is only available until March 2020, unless the SBA chooses to expand the program.

SBA Disaster Loans: Helping Your Business Recoup after Loss

Has your business recently been hit by a disaster, like a hurricane? Then an SBA Disaster Loan might fit your needs. Even if insurance and FEMA covered some of your costs, an SBA Disaster loan can help with the rest.

To qualify for many of the SBA disaster loans, you must be a small business owner AND your business needs to be in a Presidentially-declared disaster area. These are usually not small storms—think wide-scale hurricanes and floods.

If you're not sure if your business was in a declared disaster area, the SBA website lists disaster areas, including affected counties.

Check with the SBA or your lender to find out the application deadline. Disaster loans are only available for a certain amount of time following the event. The SBA also publishes a disaster declaration and fact sheet for each of their disasters.

Different Disaster Loans can help your small business recover from major disasters.

Business Physical Disaster Loans: Provide money to small business owners to repair and replace physical assets like:

  • Real estate
  • Inventory
  • Equipment
  • Machinery.

Small businesses can apply for loans up to $2 million, depending on the damage, with terms up to 30 years. Owners who decide to make improvements to reduce the risk of future damage can borrow even more—up to an additional 20 percent.

That means if your small business was affected by a hurricane, and you borrowed $500,000 to rebuild, you could also borrow another $100,000 to fortify your building against another hurricane.

You can also use this money to make sure your re-build adheres to new building codes. So, if your building was built in 1972, you could renovate the space based on 2018 standards.

What you WON'T be able to do with money from this loan: upgrade or expand your business otherwise.

Economic Injury Assistance: Not all damage from a disaster is physical.

Lost profits can be just as financially damaging for small businesses. Consider a restaurant that's forced to close when hurricane warnings and subsequent damage come at the height of tourist season.

The SBA's Economic Injury Disaster Loans help businesses that have incurred significant economic injury because of a disaster, even if the business didn't suffer any physical damage. Businesses can borrow up to $2 million for up to 30 years.

Businesses that suffer both physical and economic damage can apply for both SBA disaster loans. The maximum total loan amount is $2 million.

This loan is only for businesses that can't obtain credit elsewhere.

Home and Personal Property Loans:

In rare cases, the SBA provides assistance to people who don't even own a small business. People living in a declared disaster area might still be eligible for a loan from the SBA, whether they own a business or not.

Other Disaster Loans:

The SBA also offers disaster loans for businesses that were affected by a disaster, but not necessarily in a federally-declared disaster area.

The Express Bridge Loan is a small-scale loan with a maximum amount of $25,000 and a seven-year term.

Small businesses that experience disasters can apply for this loan only if they have an existing relationship (at the time of the disaster) with a bank that participates in the SBA Express program.

If your small business has experienced a small-scale disaster, contact the bank you currently use to see if they offer the Express Bridge Loan. This is a pilot program, and it's set to expire in September 2020.

The Military Reservists Economic Injury Loan has nothing to do with natural disasters. This loan helps small businesses handle the absence of a military employee.

If one of your essential employees is a military reservist (like a member of the Air National Guard) and is called to active duty, your business can apply for a loan to help with operating expenses. Contact your lender for current rates.

CAPLines: Flexibility for Short-Term Needs

The 7(a) loans, Disaster Loans and CDC/504 Loans all give borrowers lump sums of money. But line of credit products are also available through the SBA

The SBA offers four types of CAPLines to help small businesses with short-term needs, depending on what those short-term needs are.

Seasonal CAPLine: This can provide an influx of cash if your small business struggles to manage seasonal expense increases.

Contract CAPLines: Offers alternatives to loans for small businesses that need additional financing to help manage expenses to serve specific contracts, like increased inventory or staffing.

Small businesses that can't meet long-term credit standards can apply for a Working CAPLine. These are most often used by small businesses that provide credit to other businesses

Builders CAPLines: Only available to builders and small general contractors to construct or renovate projects. The building serves as collateral.

Like 7(a) loans, CAPLines are subject to guarantee fees and sometimes other fees as well. Your lender can advise on all of the applicable fees.

Terms are either 5 years or 10 years, depending on the type.

CAPLine rates vary between Base + 2.75% to Base + 4.75%. As of October 2018, that would mean 8%-10%.

If your business has short-term needs, CAPLines could make sense.

Whether you decide to apply for an SBA loan or choose an alternative, the SBA can still be a valuable resource.

Other Ways the SBA Can Benefit Your Small Business

The SBA also helps small businesses get money through other avenues. These include:

  • Finding debt and equity investors
  • Offering surety bonds to protect work
  • Finding government grants for scientific research and development

And the SBA isn't just a lender. Since their mission is to help small businesses thrive, they also offer services to educate business owners.

Local SBA offices often set up training for entrepreneurs and small business owners at every stage. SBA employees can help guide small business owners with creating a business plan.

The SBA also has a program to help small businesses land government contracts, which can be boons for consistent revenue.

Contact your local SBA offices to see the types of resources (usually free) they offer. The SBA website also offers assistance to small business owners.

Bottom Line

Whether you're a solopreneur or own a company that employs up to 500 people, an SBA loan could help your small business grow and thrive.

A 7(a) loan can help you secure working capital, or assist with exporting. A CDC/504 loan might be a better fit if you're physically expanding your business.

If you've recently experienced damage—economically and/or physically—in a federally-designated disaster area, you may be eligible for an SBA Disaster Loan. But you'll need to act quickly to meet deadlines.

No matter which type of loan you choose, talk with your lender first. Since SBA loan rates can change and fees can vary, you'll want to confirm up-to-date rates and understand all of the fees, terms and requirements.

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