SBA 7(a) Loans

The 7(a) loan program is the Small Business Administration’s most popular lending program. The government partially backs these loans and come with flexible terms.

Contents

7(a) Loan Interest Rates
- SBA 7(a) Fixed Rates
- SBA Express loan Rates

The Small Business Administration backs SBA 7(a) loans and provide flexible funding that can be used for various purposes. They can help a small business to expand or purchase equipment and are also used to finance real estate and working capital. These loans are usually available from banks, credit unions, community development corporations (CDCs), and micro-lending institutions. The SBA’s guaranty of the loan ensures that lenders can keep interest rates low for borrowers.

The SBA sets general guidelines for the 7(a) program that all lenders must abide by, such as maximum loan amounts and term lengths. However, the specific terms of your 7(a) loan will depend on your lender and your business’s qualifications. You can find a participating lender using SBA’s lender match tool or contact your local district office. Generally, SBA lenders may charge out-of-pocket fees for things like UCC filings or recording, photocopying, delivery charges, collateral appraisals, and environmental investigation reports. However, these fees cannot exceed 10% of the total loan amount.

7(a) Loan Interest Rates

The interest rate for a 7(a) loan depends on the purpose of the loan and the size of the loan. In addition, the interest rate may be either fixed or variable over time. The most common type of 7(a) loan is a quarterly adjustable rate, which has the advantage of being assumable. The other common type of 7(a) loan is the CDC/504 loan program, which can be used to fund fixed assets and is funded 40% by a community development corporation (CDC), 50% by a financial partner, and 10% by your business.

In addition to the basic eligibility requirements for a 7(a) loan, the interest rate for this type of loan is typically higher than that of other SBA financing options. This is because a CDC/504 loan is usually used to buy owner-occupied commercial real estate or equipment, and a CDC/504 can be backed by up to $10 million.

Interest rates for a 7(a) loan are generally pegged to the prime rate, which is a market index that changes based on the state of the economy. However, some lenders may offer a lower-than-prime rate to attract customers. These rates are called spreads and are negotiated between the lender and the borrower.

SBA Express loans are also part of the 7(a) loan program and feature faster approval times than other types of SBA financing and a lower-than-prime rate. These rates are a combination of the prime rate plus the spread, which the lender sets.