The affordability of Small Business Administration (SBA) loan rates attracts many small businesses that may not otherwise be able to obtain affordable financing. Whether you are considering SBA 7(a) loans, Express loans, microloans, or Community Development Company (CDC)/504 loans, the SBA loan rates you receive will likely be more affordable than most other financing options.
Current SBA Loan Rates
The current maximum SBA loan interest rates are:
- SBA 7(a) loan rates: 7.50% to 10.00% (learn more)
- SBA Express loan rates: 9.75% to 11.75% (learn more)
- CDC portion of CDC/504 loan rates: 3.40% to 3.65% (learn more)
- SBA microloan rates: 8% to 13% (learn more)
Typical SBA Loan Qualifications
Qualification requirements for SBA loans vary by lender, with only basic requirements set by the SBA. However, the typical requirements include having a credit score of at least 680 and annual revenues of at least $100,000. Although there are exceptions, and startups are sometimes eligible for SBA loans, the general qualification requirements also include having at least two years of business operations.
The typical qualification requirements you can expect with most SBA loans are:
- Time in business: At least two years
- Credit score: At least 680
- Loan amount: Seeking at least $30,000
- Annual revenue: At least $100,000 in revenues for the past 12 months
- Profitability: Your business must be profitable
Exact qualification requirements for SBA loans do vary between lenders. This means that it may be worthwhile to inquire with a lender before going through the SBA loan application process with any particular lender.
Well-qualified borrowers can get prequalified for up to $350,000 of SBA financing online in minutes. Our preferred SBA loan provider has a streamlined SBA loan process that funds businesses in as little as one week. Apply online to find out how much you prequalify for.
Current SBA (7A) Loan Interest Rates and Explanation
The Small Business Administration (SBA) sets the maximum interest rates that banks can charge on SBA 7(a) loans. The current maximum interest rate ranges from 7.50% to 10.00%, depending on the size of the loan and the amount being borrowed.
The maximum interest rates on SBA 7(a) loans are based on market interest rates. As market interest rates change, so will the maximum interest rates on these loans.
Maximum SBA 7A Loan Rates for September 2019
|Loan Size||Standard 7a (Repayment Term Less Than 7 Years)||Standard 7a (Repayment Term Greater than 7 Years)|
|Less Than $25,000|
9.50% (5.25% base rate + 4.25% markup)
10.00% (5.25% base rate + 4.75% markup)
8.50% (5.25% base rate + 3.25% markup)
9.00% (5.25% base rate + 3.75% markup)
|More Than $50,000|
7.50% (5.25% base rate + 2.25% markup)
8.00% (5.25% base rate + 2.75% markup)
Use our free SBA loan calculator to estimate payments based on these SBA loan rates.
How SBA 7(a) Loan Rates are Determined
As the table above shows, 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) + 3.0%, or SBA PEG Rate
- The term of the loan: Fewer than seven years or greater than seven years. For example, three and five-year loans would all fall into the same category of fewer than seven years.
- The size of the loan: Less than $25,000, $25,000 to $49,999, and more than $50,000. For example, loans of $30,000 and $45,000 will fall in the same category.
Loans with terms longer than seven years have a maximum interest rate that is 0.5% higher than similar size loans that have terms less than seven years. Loans for more than $50,000 have a 1% lower maximum interest rate than loans between $25,000 and $49,999 when taken for similar terms. Similarly, loans for $25,000 to $49,999 have 1% lower maximum interest rate than loans for less than $25,000.
If you are interested in applying for an SBA Loan, we recommend checking out SmartBiz. They are the best company we have found at providing quick turnarounds on SBA loan approvals, and you can find out how much you qualify for in minutes.
SBA Express Loan Rates
SBA Express loans are a subset of the SBA 7(a) loan program. It offers a faster approval process than a standard SBA 7(a) loan. However, this convenience is offset by a higher interest rate. Maximum interest rates for SBA Express loans currently range from 10% to 12%.
The maximum interest rates for SBA Express loans are:
- Loans up to $50,000 (prime + 6.5%): 11.75%
- Loans over $50,000 (prime + 4.5%): 9.75%
SBA Express loans carry a higher interest rate for similar size amounts and terms than the standard SBA 7(a) loan. We recommend avoiding SBA Express loans, as firms like SmartBiz can provide approval for the standard SBA 7(a) loan program with similar turnaround times.
Do You Qualify for an SBA Loan?
Fixed vs Variable SBA Loan Interest Rates
SBA 7(a) loans can have a fixed or variable interest rate. With a fixed-rate business loan, the loan interest rate remains constant throughout the life of the loan. With a variable-rate small business loan, the interest rate on the loan can change―often referred to as a reset―at regular intervals, such as quarterly or monthly.
With variable-rate SBA 7(a) loans, the rate is reset based on one of three publicly available market interest rate numbers, plus a fixed percentage. The interest rate must always be at or below the maximum interest rate set by the SBA. For smaller size SBA loans―for example, those less than $500,000―banks tend to offer only variable-rate loans, with interest rates at or close to the maximum allowable by the SBA.
The Base Rate and Interest Rate Resets
Banks can choose one of three market interest rate measures as their base rate. These are the prime rate, LIBOR + 3.0%, or the SBA PEG Rate. While there are small differences between these rates, they tend to track each other very closely. The prime rate is the one that’s most commonly used.
Rates as of September 1, 2019:
- Prime rate: 5.25% (source: WSJ)
- LIBOR (one month) + 3.0%: 5.21% (source: Bankrate)
- SBA PEG Rate: 2.63% (source: National Association of Government Guaranteed Lenders)
These rates can go up or down based on market conditions. Currently, they remain at decade-low levels. During the last 10 years, the prime rate has been as high as 8.25%.
With a variable-rate SBA 7(a) Loan, as market interest rates rise, so will the rate on the loan. Let’s take the example of a 10-year loan for $50,000 with interest rates rising by 2%.
For example, if the interest rate on the loan is 9%, with a monthly payment of $633 per month. With a 2% rise in interest rates upon the interest rate reset, the rate would be 11%, with a monthly payment of $689―this would be the monthly increase for a newly issued loan.
SBA 7(a) Loan Fees
In addition to the SBA loan interest rates charged on SBA 7(a) loans, there are also a number of fees you may encounter with this loan type. These additional fees include packaging fees that can cost as much as $4,000 or more, servicing fees of up to 2% of the loan amount, closing costs, and prepayment fees.
You can also be charged other SBA 7(a) loan fees such as:
- Packaging fee: Up to $4,000, this fee varies by lender. However, it cannot exceed the amount charged for similarly sized non-SBA-guaranteed loans
- Extraordinary servicing fee: Up to 2% of the loan amount may be charged if your account will require extra work on the part of the lender, such as monitoring a construction project
- Closing costs: All direct costs related to the loan like title fees, appraisal fees, environmental report fees, attorney fees, and business valuation fees
- Prepayment fee: On SBA 7(a) loans with terms of 15 years or greater, your lender can charge you a prepayment fee if you prepay more than 25% of your loan in the first three years. The fee is charged against the amount you prepaid and is 5% for prepayments in the first year, 3% for prepayments in the second year, and 1% for prepayments in the third year
If you’re looking for an SBA loan up to $350,000, we recommend applying with SmartBiz. If you’ve been in business for two or more years, have a credit score above 680 and are profitable, you may qualify. Get prequalified in less than five minutes and receive funding in as little as 30 days.
Current SBA Loan Rates On Real CDC / 504 Loans
The SBA sets the maximum interest that banks can charge on CDC/504 loans. The current maximum interest rate on SBA CDC/504 loans ranges from 3.40% to 3.65%, depending on the size of the loan and the amount being borrowed.
The maximum interest rates on CDC/504 loans are also based on market interest rates. As market interest rates change, so will the maximum interest rates on these loans.
While an SBA 7(a) loan can be used to purchase real estate, a real CDC/504 loan will tend to provide borrowers with tremendous interest rate savings.
A CDC/504 loan is composed of two loans:
- Bank loan: A loan from a financial institution (bank) for typically 50% of the price of the property, equipment, and building upgrades.
- CDC loan: A loan from a CDC―a nonprofit organization―for 40% of the price.
The remaining 10% is a down payment from the borrower. The interest rates on the bank portion of the loan are not set by the SBA. However, the interest rates on these loans tend to be very low, currently capping out at roughly 10%. Because the bank loan is senior to the CDC loan and the loan is backed by real-estate, there is a low risk that the bank will not be able to get back the money it loans. The low-risk is reflected in the low interest rates.
The maximum interest rate on the CDC portion of the loan is set by the SBA.
Current Maximum Interest Rates CDC Loan
|Term of Loan||Treasury Rate||Fixed Rate||Ongoing Fees||Maximum Interest Rate|
|10 Years||5-year Treasury (currently 1.79%)||0.38%||1.7% (approximate)|
3.40% (1.32% 5-year Treasury rate + 0.38% fixed rate + 1.7% ongoing fees)
|20 Years||10-year Treasury (currently 2.03%)||0.48%||1.7% (approximate)|
4.08% (1.47% 10-year treasury rate + 0.48% fixed rate + 1.7% ongoing fees)
*Using Treasury rates for September 1, 2019
The SBA loan interest rates on CDC/504 loans are:
- Interest rate on a 10-year CDC/504 loan: A 10-year CDC/504 loan will have an interest rate which combines the current five-year treasury rate, a fixed rate of 0.38%, and 1.7% in annual fees. As the table shows, the interest rates are based on the length of the loan:
- Interest rate on a 20-year CDC/504 loan: A 20-year CDC/504 loan will have an interest rate which combines the current 10-year treasury rate, a fixed rate of 0.48%, and 1.7% in annual fees.
Unlike an SBA 7(a) loan that may have a variable rate, the loan rates for the CDC portion of an SBA 504 loan are fixed for the life of the loan and will not go up or down. The portion of the loan provided by the bank, credit union, or non-bank lender does not need to be fixed―it may have a variable rate, a balloon payment, and so on.
If you are looking for a commercial real estate loan, have been in business for at least two years, and have a credit score of at least 650, an SBA 7(a) loan with Celtic Bank could be an ideal solution. Celtic Bank is a national SBA lender that offers competitive rates for loans up to $5 million.
SBA CDC/504 Loan Fees
In addition to the SBA loan interest rates on an SBA CDC/504 loan, there are also a number of fees to be aware of. These fees include the CDC servicing fee, the central servicing agent fee, and the SBA guarantee fee. These fees are charged on the loan in addition to the interest rate.
Rates & Fees for an SBA CDC/504 Loan
|Annual Fees||10-year Loan||20-year Loan|
|Interest Rate||5-year Treasury (around 1.79%) + 0.38%||10-year Treasury (around 2.03%) + 0.48%|
|CDC Servicing Fee||0.625%-2.00%||0.625%-2.00%|
|Central Servicing Agent Fee||0.1%||0.1%|
|SBA Guarantee Fee||0.914%||0.914%|
|Total Fees & Interest Rates per Year||3.87%-5.18%||4.21%-5.52%|
Current SBA Loan Interest Rates on SBA Microloans
Loan amounts for SBA microloans cannot exceed $50,000, and repayment periods cannot extend beyond six years as these thresholds are set by the SBA. Interest rates for microloans generally range from 8% to 13%. However, the exact rates and terms available for SBA microloans vary by lender.
The current SBA loan interest rates for microloans are between 8% and 13%.
SBA Microloan Fees
Beyond the interest rate, there are some additional fees you may encounter with an SBA microloan. These fees include application fees, loan processing fees, and closing costs. Fees for SBA microloans vary by lender, and not all lenders will charge all of the fees listed.
SBA Microloan Fees
|Application Fee||$25 to $50|
|Loan Processing Fee||$100 to $150|
|Closing Costs||2% to 5% of the loan amount|
SBA microloans are offered by intermediaries referred to as SBA microlenders. These SBA microlenders are typically area nonprofit organizations with experience in small business lending and technical assistance. The SBA maintains a list of all current SBA microlenders, making it easy for you to find a lender in your state.
SBA vs Conventional Small Business Loan Rates
In general, SBA loan rates will be higher than the interest rates offered by traditional banks. On average, conventional small business loans rates range between 3% to 6%. While conventional business loan rates are lower than SBA rates, one of the eligibility requirements for an SBA loan is that you are unable to obtain credit elsewhere.
Many banks are not interested in making loans of less than $300,000 to small businesses. The portion of business loans that banks make that are less than $1 million has been shrinking for decades. The SBA guarantee against nonpayment makes these loans less risky and potentially more profitable for banks. Without an SBA guarantee, these loans would probably not be financed at all.
With the variety of loan programs offered by the SBA, there are many opportunities for small businesses to consolidate debt or find a loan that meets their small business needs. Affordable SBA loan rates, coupled with favorable repayment terms, make them an attractive financing option for small businesses.
If you need an SBA 7(a) loan of $350,000 or less, SmartBiz has a streamlined application process that allows you to prequalify online in minutes. If you have a credit score of at least 680 and two years of business operations, you may qualify. If approved, SmartBiz can provide SBA loan funding in as little as 30 days.