Current SBA Loan Rates for September 2023
This article is part of a larger series on Business Financing.
The rate you get on a Small Business Administration (SBA) loan can depend on the type of SBA loan you’re applying for, the lender you choose, and your business qualifications. While rates generally have had an upward trend throughout 2021 and 2022, SBA loans are still one of the more affordable loan options you can get. As we are now halfway through 2023, we’ve also started to see rates come down.
Below is a chart showing SBA loan rates for the various programs available.
SBA Loan Rates as of September 15, 2023 | |
|---|---|
SBA Loan Type | Loan Rates |
SBA 7(a) Variable | 11.50% to 15.00% |
SBA 7(a) Fixed | 13.50% to 16.50% |
SBA Express | 11.50% to 15.00% |
CDC Portion of CDC/504 loans | 6.808% to 7.052% |
SBA Microloan | 8% to 13% |
SBA Economic Injury Disaster Loans (EIDL) | 2.75% to 3.75% |
To learn about which SBA loan program is right for you, qualification requirements, and how to apply, head over to our guide on the different types of SBA loans. We also explain how the loans work and the specific loan terms you can expect—such as repayment terms, closing costs, and allowable uses of the loan proceeds.
If you need help getting an SBA loan, we recommend considering Clarify Capital. It’s a broker with more than 75 lenders in its network, giving you more options and opportunities to get approved. You’ll also work with a dedicated advisor who will walk you through the loan process. For an SBA 7(a) loan, you can qualify with a credit score of 640 or higher while SBA microloans have a minimum credit score requirement of 575.
How SBA Loan Rates Are Determined
SBA loan interest rates are typically determined by three main factors: the loan terms, your business qualifications, and a base rate.
Loan terms can include things like a fixed or variable interest rate, repayment term, and loan amount, while qualifications can include your credit score, time in business, and revenue. Finally, the base rate can be chosen from one of several publicly available benchmarks.
SBA rates can be affected by the following loan terms:
- Repayment term: Generally speaking, loans with a shorter repayment term have lower interest rates.
- Fixed vs variable interest rate: If you want to get the lowest rates possible, a variable interest rate is usually the best option. However, variable-rate loans can have changes in the rate and corresponding payment at monthly or quarterly intervals. Meanwhile, fixed-rate loans will have the same monthly payment for the life of the loan.
- Loan amount: For many SBA loans, higher loan amounts carry lower interest rates. However, this may not always be the case and can vary depending on the lender you choose.
The stronger your business is, the more likely you’ll be able to qualify for the best possible rates. The following are areas of your business that are commonly considered in determining not only the rate you get but also whether you will get approved for the loan:
- Credit score (personal and business): A credit score is designed to show how likely you are to continue making timely loan payments. To learn more about common personal credit scoring models, you can head over to our guide on what a bad credit score is. We also provide guidance on how you can get a good business score in our article on how business credit scores work.
- Debt service coverage ratio (DSCR): DSCR is calculated by dividing your company’s net operating income by the current year’s debt obligations. It is used as one tool to evaluate your company’s ability to repay debt. In general, you should aim for a DSCR ratio of 1.25 or greater. Learn more about it in our guide on DSCR, which includes a DSCR calculator.
- Time in business: Companies that have been operating for less than two years are classified as startups and may not be able to qualify for the best rates. This is because startups have a high failure rate and are therefore seen as more of a risk.
- Business revenue: Some lenders have minimum revenue requirements to even be considered for a loan. In most cases, you’ll need to exceed these minimums to get the lowest advertised rates.
- Business type: Some loans, such as SBA EIDL loans, offer lower interest rates for nonprofit businesses versus those operating as for-profit companies.
Lenders can choose from one of several publicly available benchmarks to use as the base rate. These include the prime rate, London Interbank Offered Rate (LIBOR), and the SBA’s price/earnings to growth (PEG) rate.
Base Rates as of September 15, 2023 | |
|---|---|
Base Rate Name | Rate Name |
Prime Rate | 8.50% |
LIBOR (One Month) + 3.0% | N/A |
SBA PEG Rate | 3.75% |
As of June 30, 2023, LIBOR will be replaced by the Secured Overnight Financing Rate (SOFR). LIBOR has been slowly phased out over the past several months. The one-week and two-month LIBOR rates were retired on Dec. 31, 2021, while the one-, three-, six-, and 12-month rates will be retired at the end of June.
SBA 7(a) Loan Rates
Although rates can vary among lenders, the SBA does set maximum rates that can be charged. The maximum SBA loan rates for a 7(a) loan are listed below and can vary depending on the specific terms you want.
What You Can Do With an SBA 7(a) Loan
The most common type of SBA loan program is the 7(a) loan. These can be used for almost any business-related purposes, including a variety of working capital and long-term financing needs. Examples of what you can do with proceeds from an SBA 7(a) loan include:
- Purchasing equipment, machinery, fixtures, supplies, and materials
- Acquiring real estate, including land and buildings
- Paying for construction or renovation costs for real estate
- Refinancing existing business debt
- Purchasing another business as part of an acquisition or merger
- Financing working capital
- Acquiring land or making site improvements
To get more details on allowable uses, requirements, fees, and terms for an SBA 7(a) loan, read our guide on the SBA 7(a) loan.
SBA Express Loan Rates
SBA Express loans are part of the SBA 7(a) loan program. These loans offer faster approvals, as decisions can be made within 36 hours. You can get up to $500,000 on an SBA Express loan.
Maximum SBA Express Loan Rates as of September 15, 2023 | |
|---|---|
Loan Amount | Loan Rate |
$50,000 or less | 15.00% (prime + 6.5%) |
$50,001 to $250,000 | 14.50% (prime + 6.0%) |
$250,001 to $350,000 | 13.00% (prime + 4.5%) |
Greater than $350,000 | 11.50% (prime + 3.0%) |
Read our article on SBA Express loans, where we cover how these loans work in greater detail.
SBA Rates on CDC/504 Loans
An SBA 504 loan consists of two loans: one portion comes from a bank while the second comes from a certified development company (CDC).
- Bank loan (can be variable or fixed rate): This is typically provided for up to 50% of the loan you’ve requested. Rates are determined by the bank, but because this type of loan is secured by some form of real estate, rates are typically low to reflect the reduced level of risk to the bank.
- CDC loan (fixed rate only): This portion is granted for up to 40% of the price of the land, equipment, or other real estate for which you need funding. The SBA does dictate the maximum interest rates that can be charged for this portion of the SBA 504 loan.
SBA Rates for CDC/504 Loans as of September 15, 2023 | |
|---|---|
Loan Term | Loan Rates |
10-year Term | 7.052% |
20-year Term | 6.862% |
20-year Term Refinance | 6.880% |
25-year Term | 6.808% |
25-year Term Refinance | 6.826% |
What You Can Do With an SBA 504 Loan
SBA 504 loans are designed to provide funding for major fixed assets that help create or promote job growth. You can get up to $5.5 million in financing. Some examples of what you can do with the proceeds from an SBA 504 loan are:
- Purchasing or building offices or land
- Acquisition of machinery or equipment
- Improving land, streets, utilities, and landscaping
- Renovating existing facilities
To learn more about how SBA 504 loans work and qualification requirements, head over to our guide on SBA 504 loans.
SBA Microloan Rates
Interest rates for SBA microloans are generally between 8% and 13%, with a maximum repayment term of six years. SBA microloans are offered through SBA intermediaries—and you can view SBA’s list of participating lenders. The exact rate you get can vary depending on the SBA intermediary lender you choose.
What You Can Do With an SBA Microloan
You can get up to $50,000 on an SBA microloan, although the SBA states that the average microloan is around $13,000. Microloans can be used for a variety of business purposes as long as it is not used to pay existing debts or purchase real estate.
Below are some examples of what you can use an SBA microloan for:
- Working capital
- Supplies
- Inventory
- Furniture and fixtures
- Machinery and equipment
SBA EIDL Rates
SBA EIDL loans are issued to businesses that have been affected by a natural disaster and are unable to get financing elsewhere. Funds can be used to pay for business-related expenses that you otherwise would have been able to cover. Some examples include payroll expenses, equipment repairs, and debt payments.
EIDL Rates & Terms | |
|---|---|
Last Updated: Oct. 1, 2022 | Rate or Term |
Loan Amount | Up to $2 million or 24 months of economic activity |
Repayment Term | Up to 30 years |
Interest Rate | 3.75% for for-profit businesses 2.75% for nonprofit businesses |
Deferral of Payment | Up to 24 months |
Head over to our SBA EIDL guide for more information on how these loans work, how to qualify, and how you can submit a loan application.
Bottom Line
SBA loans can offer some of the lowest rates available. Rates can vary depending on the type of SBA loan you’re applying for, as well as your business qualifications. To help your chances of getting the lowest rate possible, we recommend reading our tips on how to get a small business loan, where we discuss how you can submit a loan application that is viewed favorably by lenders.
