What Rates to Expect for SBA Loan Programs

Trying to find a business loan can be a complex and confusing task, but you may be able to get help from the U.S. Small Business Administration (SBA). The SBA’s loans have competitive rates and its guarantee can boost your chances of getting lender approval. Below, you’ll find details about three SBA lending programs: 7(a), 504(CDC), and microloans.

SBA Loan Eligibility

To be eligible for an SBA loan, all small businesses must: 

• Be a for-profit business
• Be located and operated in the U.S. or its territories
• Have invested their own time and money in the business
• Not be able to get funds from any other financial lender
• Be a “small business” according to SBA size standards

Paycheck Protection Program/Disaster Loans

The original Paycheck Protection Program (PPP) was a special SBA 7(a) loan program that distributed funds to help small businesses. The program application period has been extended to May 31, 2021. SBA will process applications until June 30. As of Aug. 8, 2020, 5,212,128 loans were approved, and over $525 billion in funding was distributed. Businesses that received PPP loans can apply for loan forgiveness through their lender.  

The American Rescue Plan signed on March 11, 2021, added additional PPP funding and expanded eligibility to non-profits and digital media companies. An additional $25 billion was appropriated for bars and restaurants affected by the pandemic.

7(a) General Small Business Loans

The SBA’s primary loan program is the 7(a) loan. These loans are provided by lenders under SBA guidelines and requirements, and the SBA guarantees a portion of the loan. Types of 7(a) loans include a small loan, an express loan with fast turnaround, and specialized loans for different types of small business lending needs. Here are the current amounts, rates, and fees for 7(a) loans. 

Loan Amounts

Maximum loan amount:  

• $5 million, with a maximum SBA guarantee of 85% for loans up to $150,000, and 75% for loans greater than $150,000. 

Maturity Terms

Maximum loan lengths for 7(a) and other SBA loans:

• 25 years for real estate
• 10 years for equipment
• 10 years of working capital or inventory loans 

Interest Rates

Interest rates, based on loan amount and maximum loan term:

Loan Amount	Max rate if maturity < 7 Years	Max rate if maturity > 7 years
$25,000 or less	Base rate plus 4.25%	Base rate plus 4.75%
$25,000-$50,000	Base rate plus 3.25%	Base rate plus 3.75%
$50,000 or more	Base rate plus 2.25%	Base rate plus 2.75%

Variable-rate loans may be pegged to the lowest prime rate, the LIBOR Rate, or the SBA optional peg rate. 

Fees

Based on loan type and size and calculated on the SBA-guaranteed portion: 

• Loans of $150,000 or less: 2% 
• SBA Express loans: No fee
• Loans from $150,000-$700,000: 3% 
• Loans from $701,001-$5 million: 3.5% up to $1 million, plus 3.75% over $1 million
• Short-term loans (12 months or less): 0.25%  

CDC/504 Loans

The 504 loan program provides approved small businesses with loans through certified development companies (CDCs). A CDC is a non-profit corporation that promotes economic development in its local community. These independent lenders are licensed by the SBA, which guarantees a part of the loan. 

CDC/504 loans are given for specific projects, with CDCs, local lenders, and the SBA working together. Here are the financing amounts, requirements, rates, and fees. 

Financing

• Up to 90%, with the CDC providing 40% of the total project cost, the lender covering up to 50%, and the borrower contributing 10%-20% 
• A loan maximum of $5 million-$5.5 million, depending on the type of business or project

Requirements

• 504 loan proceeds must be used primarily (at least 85%) for fixed assets, including buying or improving a building, land and improvements, long-term machinery, or refinancing for expansion. 
• Project assets are used as collateral for the loan.

 Interest Rates

• Based on current market rates for 5-year and 10-year U.S. treasury issues. 

Fees 

• Participation fee of 0.5% on lender share, plus CDC charge up to 1.5% on its share  
• CDC monthly servicing fee of 0.625%-2.0% on unpaid balance 
• Ongoing SBA guaranty fee is 0.642% of principal outstanding  

Microloans 

SBA microloans are smaller loans up to $50,000 to help small businesses and not-for-profit child care centers fund startup or expansion. The microloan program gives funds to nonprofit community-based lenders (called intermediaries) to administer the loans for eligible borrowers. 

Microloan funds can be used for working capital, inventory or supplies, furniture or fixtures, or machinery and equipment. You can’t use microloan funds to pay off existing debts or to buy real estate. 

The maximum loan term is six years, with interest rates varying between 8% and 13%. 

Additional Resources

To find a local lender for one of these SBA loan programs, contact the nearest District Office.