Current SBA loan rate caps set with the prime rate at 7%
The short version
- Current maximum rates use a 7% prime rate.
- Check your Current loan terms against these federal caps to ensure your lender is not overcharging.
The Small Business Administration, the federal agency backing small business loans, has outlined Current maximum allowable interest rate caps across its major programs based on a 7% prime rate. SBA loan rates vary by program, loan size, and repayment term. Understanding these federally set caps can help you compare small business loan options and learn whether you are getting a competitive rate from your lender.
According to Nav, lenders cannot exceed these maximums, but they are free to compete by offering lower rates depending on your creditworthiness, business strength, and relationship. For example, a business owner with excellent credit might secure a rate of prime plus 5.5% instead of the maximum prime plus 6.25%.
Variable rates adjust with changes to the base rate, while fixed rates lock in at approval. SBA 7(a) standard loans and Express loans, which feature a maximum loan amount of $500,000, follow similar markup formulas. Meanwhile, SBA microloans max out at $50,000 through intermediary lenders with a maximum repayment period of 7 years.
SBA 504 loans finance major fixed assets like real estate or equipment with a portion funded through sales of SBA debentures carrying a fixed rate. Disaster loans are the only loans the SBA currently makes directly to borrowers, with rates set when a disaster is declared and terms stretching up to 30 years. Checking your financing details now ensures you understand your true borrowing costs.
