SBA Loans

SBA Loan Interest Rates December 2023

Dec 04, 2023 • 8 min read
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      SBA loans can be an incredible financial resource for business owners who want to grow or sustain their companies. Understanding SBA loan interest rates is an important part of determining just how helpful this type of financing can be since costs vary based on many different factors. Explore the most popular SBA loan programs and their rate structures to find out which one is the best fit for your company.  

      How SBA loan interest rates work.

      SBA loan rates are regulated by the U.S. Small Business Administration. Private lenders negotiate their own rates with each individual borrower. But the offered loan rate cannot exceed the maximum set by the SBA for each loan program. 

      The maximum is tied to a base rate, which can be one of the following:

      • Prime rate
      • Optional peg rate

      In most cases, however, you’ll find that lenders use a prime rate as the base rate. The borrower is then charged a percentage over that base rate. That amount depends on the loan amount, the type of SBA loan, and the loan maturity date. 

      Current SBA loan rates.

      Here is how each SBA interest rate breaks down, based on the loan program and other details. 

      SBA 7(a) loan rates

      SBA 7(a) loans can be used for general working capital needs and have interest rates that can either be variable or fixed. Fixed rates have a higher premium but never change, even if the base rate increases over time. SBA 7(a) rates range from 3% to 8% above the base rate. Use the following table to compare rates for different loan sizes and term lengths. The current (December 2023) Wall Street Journal Prime Rate is 8.5%.

      AmountMaximum Fixed Rate
      $25,000 or lessPrime +8%
      $25,000 – $50,000Prime +7%
      $50,000 – $250,000Prime +6%
      Greater than $250,000Prime +5%
      AmountMaximum Variable Rate
      Up to $50,000Prime + 6.5%
      $50,000 to $250,000Prime + 6.0%
      $250,000 to $350,000Prime + 4.5%
      Greater than $350,000Prime + 3.0%

      SBA 504 loan rates

      SBA 504 loans are designed to purchase assets that help with job creation or business growth, such as new facilities, machinery, or renovating an existing property. These loans are available through certified development companies (CDCs) and offer fixed interest rates.

      You can apply for either a 10-year or a 20-year repayment period. The SBA 504 rates are incrementally pegged above the current rates for 5-year and 10-year U.S. Treasury issues. The rate typically totals 3% of the loan amount. 

      SBA Microloan loan rates

      Microloans from the SBA help newer small businesses with startup or expansion costs. Borrowers can get approved for up to $50,000, although the average loan size is $13,000. The maximum repayment term is six years. Expect SBA microloan rates to range from 8% to 13%. 

      SBA Express loan rates

      SBA Express loans allow for a shorter approval time, so you can get faster access to capital. In fact, you’ll get an initial response within 36 hours. The maximum loan amount is capped at $500,000 and rate maximums are the same as SBA 7(a) loans.

      SBA Community Advantage loan rates

      The SBA Community Advantage loan program was created to help businesses in underserved markets. These loans were capped at $350,000. Interest rates were negotiated by the lender but were subject to the SBA’s maximums. This program was sunsetted in October 2023. Lenders under this program are now licensed as Community Advantage Small Business Lending Companies in the 7(a) loan program and will continue to provide access to financing to underserved communities.

      Typical SBA loan fees.

      In addition to paying interest on SBA loans, borrowers may also pay an upfront SBA Guaranty Fee.

      Upfront fee on SBA 7(a) loans.

      This fee is based on the approved loan amount, including both the guaranteed and the unguaranteed portions.

      Loans with 12-month maturity or less
      Loan AmountFee 
      $1 million or less0%
      $1 million+0.25% of the guaranteed portion
      Loans with more than 12-month maturity
      Loan AmountFee 
      $1 million or less0%
      $1 million – $2 million1.45% of the guaranteed portion
      $2 million+3.5% of guaranteed portion up to $1,000,000 PLUS 3.75% of the guaranteed portion over $1,000,000

      Frequently asked questions

      SBA loan rates vary depending on a number of factors, including the type of SBA loan, the size, and the maturity date. The current prime rate (as of November 2, 2023) is 8.5%. That means SBA 7(a) loan fixed rates can range anywhere between 13.5% and 16.5% depending on your loan terms.

      There are no interest-free SBA loans. Direct lenders will always charge interest on SBA loans. During the early days of the COVID-19 pandemic, there was some temporary relief passed for business owners with existing SBA loans. This allowed for the SBA to pay for six months of principal, interest, and fees for borrowers with 7(a), 504, or microloans. However, the cutoff date was for loans approved by September 27, 2020.

      An SBA loan could come with either a fixed rate or a variable rate. The interest rate structure varies depending on which one you pick. Compare loan offers from multiple lenders to make sure you have as many options to choose from as possible.

      To calculate monthly payments for your SBA loan, visit our SBA loan calculator. Need help finding the best interest rate for your SBA loan or other business term loan?

      Apply with Lendio today!

      Quickly compare loan offers from multiple lenders.

      Applying is free and won’t impact your credit.

      About the author
      Lauren Ward

      Lauren Ward is a personal finance and tech writer with a passion to help consumers make smart financial decisions. Her work has appeared in a variety of publications, including Time and MSN. When she's not writing, she loves gardening and playing board games with her family.

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