Current SBA Loan Rates for January 2023
This article is part of a larger series on Business Financing.
With interest rates steadily rising throughout 2022, more borrowers are turning to Small Business Administration (SBA) loans to obtain affordable financing. While SBA rates have also risen over the last year, these remain among the most affordable loan options.
Regardless of what type of SBA loan you need, you’ll likely find lower rates than other financing options. Listed in the table below are the six types of SBA loans and the current loan rate ranges for each type.
SBA loan rates as of January 17, 2023 | |
|---|---|
SBA Loan | Loan Rates |
SBA 7(a) loan rates | 9.75% to 12.25% |
SBA Express loan rates | 12.0% to 14.0% |
CDC portion of CDC/504 loan rates | 6.282% to 6.433% |
SBA Microloan rates | 6% to 9% |
SBA Economic Injury Disaster Loan (EIDL) rates: | 2.75% to 3.75% |
If you’re looking for an SBA loan, South End Capital is a great choice. You can get funding of up to $25 million with little to no collateral and a credit score as low as 650. Even if you’re a sole proprietor or a startup, you can get funding through this lender.
SBA 7(a) Loan Interest Rates & Explanation
The SBA sets the maximum interest rates banks can charge for SBA 7(a) loans, and rates vary depending on the size of the loan and the length of the repayment term. These loans are based on market interest rates, so as the prime rate changes, so will the SBA 7(a) loan rates.
Maximum SBA 7(a) Loan Rates for January 2023 | ||
|---|---|---|
Loan Size | Repayment Term Less than 7 Years | Repayment Term Greater than 7 Years |
Less than $25,000 | 11.75% (prime rate + 4.25%) | 12.25% (prime rate + 4.75%) |
$25,000 to $50,000 | 10.75% (prime rate + 3.25%) | 11.25% (prime rate + 3.75%) |
More than $50,000 | 9.75% (prime rate + 2.25%) | 10.25% (prime rate + 2.75%) |
To estimate your monthly payment on an SBA 7(a) loan, check out our free SBA loan calculator. This will allow you to estimate payments based on the current rates and the loan size needed.
How SBA 7(a) Loan Rates are Determined
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, London Interbank Offered Rate (LIBOR) (one month) plus 3.0%, or the SBA’s price/earnings to growth (PEG) ratio.
- The loan term: Loans of greater than seven years will be priced higher than those under seven years.
- The loan size: Loan sizes are categorized as less than $25,000, from $25,000 to $50,000, and over $50,000.
The one-week and two-month LIBOR rates will be retired on Dec. 31, 2021. However, the one-month, three-month, six-month, and 12-month rates will continue through June 30, 2023. It will be replaced by the Secured Overnight Financing Rate (SOFR).
Fixed vs Variable SBA Loan Interest Rates
SBA 7(a) loans can have either a fixed or variable interest rate. Fixed-rate loans have the same interest rate throughout the life of the loan, whereas variable-rate loans can have changes in rates at quarterly or monthly intervals.
Interest rates must be at or below the maximum interest rate set by the SBA. Banks tend to offer only variable rate loans to smaller SBA loans under $500,000. Rates on those loans are typically set near or at the maximum allowed by the SBA.
Base Rate & Interest Rate Resets
Banks can choose one of three market interest rates as their base rate. The prime rate, which is most often used, and LIBOR rates tend to be very close. The SBA PEG rate is released quarterly, so it can differ slightly, especially in a volatile rate market.
Rates as of January 17, 2023 | |
|---|---|
Rate Name | Loan Rates |
7.5% | |
7.43% | |
4.13% | |
SBA Express Loan Rates
SBA Express loans, a subset of the SBA 7(a) loan program, offer a faster approval process than a standard SBA 7(a) loan. However, the price for faster approval is a higher interest rate. Express loans have a maximum of $350,000.
The maximum interest rates for SBA Express loans are:
Rates as of January 17, 2023 | |
|---|---|
Loan Amount | Loan Rates |
Loans up to $50,000 (Prime + 6.5%) | 14.0% |
Loans over $50,000 (Prime + 4.5%) | 12.0% |
SBA Express loans carry a higher interest rate for similar size amounts and terms than the standard SBA 7(a) loan. If you’re interested in an SBA Express loan, SmartBiz is an excellent option—you can get funding in as little as 30 days.
SBA Loan Rates on CDC/504 Loans
The SBA sets the maximum interest rates banks can charge on Community Development Company (CDC)/504 loans. The maximum interest rates on CDC/504 loans are tied to market interest rates based on the amount borrowed.
A CDC/504 loan is composed of two loans:
- Bank loan: A loan from a financial institution for typically 50% of the price of the property, equipment, and building upgrades.
- CDC loan: A loan from a nonprofit organization, a certified development company (CDC), for 40% of the price.
The remaining 10% is a down payment from the borrower. While the SBA doesn’t set the interest rate on the bank portion of the loan, the interest rate on these loans tends to be very low. Since the loan is backed by real estate, there’s a lower risk to the bank of not getting back the money it lends. This lower risk is reflected in a lower interest rate.
CDC Loan Interest Rates as of January 17, 2023 | |
|---|---|
Term | Loan Rates |
10-year Term | 6.433% |
20-year Term | 6.282% |
20-year Term Refinance | 6.300% |
25-year Term | 6.310% |
25-year Term Refinance | 6.327% |
Loan rates for the CDC portion of an SBA 504 loan are fixed for the life of the loan. The loan portion provided by the bank, credit union, or non-bank lender doesn’t have to be fixed—it may have a variable rate or balloon payment.
SBA Loan Interest Rates on SBA Microloans
Loan amounts for SBA microloans cannot exceed $50,000, and repayment periods cannot extend beyond six years. Interest rates for microloans generally range from 6% to 9%. However, the exact rates and terms available for SBA microloans vary by lender.
SBA microloans are offered by intermediaries, referred to as SBA microlenders. They’re often nonprofit organizations with expertise in small business lending and technical assistance. The SBA maintains a list of all current SBA microlenders, organized by state.
Economic Injury Disaster Loans (EIDLs)
Businesses that have suffered economic loss through a national or economic disaster could be eligible for EIDLs. These SBA disaster loans require a disaster declaration from the federal government for a business to apply.
If your business meets these eligibility requirements, you can apply for an EIDL directly through the SBA’s Disaster Loan Portal. However, the portal has been closed for EIDL loans for businesses affected by COVID-19.
Frequently Asked Questions
What is the interest rate on an SBA 7a loan?
The maximum interest rate on an SBA 7(a) loan is determined by the size of the loan and the length of the repayment term. Those rates can be calculated using the following list below:
- Less than $25,000 loan, less than seven-year term: Prime rate + 4.25%
- Less than $25,000 loan, more than seven-year term: Prime rate + 4.75%
- $25,000 to $50,000 loan, less than seven-year term: Prime rate + 3.25%
- $25,000 to $50,000 loan, more than seven-year term: Prime rate + 3.75%
- More than $50,000 loan, less than seven-year term: Prime rate + 2.25%
- More than $50,000 loan, more than seven-year term: Prime rate + 2.75%
What disqualifies you from getting an SBA loan?
You can be disqualified from getting an SBA loan for either personal or business reasons. For instance, you can be denied if one or more of the following is true:
- Your credit score is too low
- There’s an issue of character, such as a criminal record
- You don’t have the revenue to repay the loan
- You don’t have enough collateral
Meanwhile, your business can be disqualified if you’re in an ineligible business, including those engaged in illegal activities, loan packaging, speculation, multisales distribution, gambling, investment, or lending, or where the owner is on parole.
How long can you finance an SBA loan?
The maximum length of an SBA loan depends on the loan type. Real estate loans can be financed for up to 25 years, while equipment loans, working capital loans, and inventory loans max out at 10 years.
Bottom Line
While all interest rates have increased over the last year, SBA loans still provide the lowest rates available; however, these tend to take the longest to get funded. If you need a small business loan quickly, then you might consider a fast business loan or a same-day business loan. These can be funded within 24 hours but come with higher fees and interest rates than an SBA loan. If you can wait on funding and can qualify, SBA loans are the best financing option available for your business.
