What Are Current SBA Loan Rates in 2022?

What Are Current SBA Loan Rates in 2022?

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SBA loan rates are among the lowest available among small business financing options. The U.S. Small Business Administration (SBA) offers a variety of loan and line of credit programs, but its two most popular are the 7(a) and CDC/504 loans. The SBA doesn’t itself make loans; instead, they are made by participating lenders. The SBA guarantees the loans up to a certain percentage in case of default, which means that lenders are more willing to be flexible with the interest rates. We’ve gathered the rates for each, plus rates for those seeking emergency SBA funding.

Current SBA loan rates

Here’s the current SBA loan rates for existing loans. Though the Paycheck Protection Program is now closed, rates are included for loans not forgiven.

SBA 7(a) Loans
PPP Loan
SBA CDC/504 Loans
5.50% - 11.25%1% for portions not forgivenAbout 3.109% - 3.168% to come

Effective interest rate

Current SBA 7(a) loan rates

The 7(a) loan is the SBA's flagship loan program. There are several types of 7(a) loans available, including standard 7(a) loans up to $5 million for general business expenses. The maximum amount for 7(a) Express loans is $500,000.

Here’s a rundown of its features:

  • Amounts up to $5 million.
  • Terms up to 25 years, though standard 7(a) loans for working capital or equipment purchases have a term of up to 10 years.
  • For interest rates, see charts below.

Current 7(a) variable rates

Lenders offer SBA 7(a) loans with either variable or fixed rates. Lenders set the rates, but the SBA requires that the rate not exceed a specific percentage above a standard base rate. The standard base rate can be the Prime rate, the LIBOR rate or an optional peg rate based on rate averages that the U.S. government pays on loans; currently, the Prime rate is 3.25%. The additional percentages range from 2.25% to 4.75%. In other words, adding these to the current Prime rate provides the interest rate charged, which is reflected in the table below. The interest rates may also vary by loan term.

Maximum variable interest rates for 7(a) loans

SBA 7(a) variable loan interest rates

Loan amount
Loans with a maturity under 7 year
Loans with a maturity 7 years or more
Rate standardVariable rate maximum (with current 3.25% prime rate)Rate standardVariable rate maximum (with current 3.25% prime rate)
$0 - $25,000Base + 4.25%7.50%Base + 4.75%8.00%
$25,001 - $50,000Base + 3.25%6.50%Base + 3.75%7.00%
$50,000 or aboveBase + 2.25%5.50%Base + 2.75%6.00%

Keep in mind your variable interest rate may be lower depending on the interest rate your bank sets.

Maximum variable interest rates for SBA express loans

Loan Amount
Maximum Variable Interest Rate
$50,000 or less9.75%
More than $50,0007.75%

Current 7(a) fixed rates

The SBA sets a cap for how much fixed-rate loans can exceed Prime as these rates as well.

SBA 7(a) fixed loan interest rates

Loan amount
Fixed rate maximum
Fixed maximum allowable (with current 3.25% prime rate)
$0 - $25,000Prime + 8.0%11.25%
$25,001 - $50,000Prime + 7.0%10.25%
$50,000 - $250,000Prime + 6.0%9.25%
Over $250,000Prime + 5.0%8.25%

According to the SBA, fixed interest rate 7(a) loans are based on the Prime rate in effect on the first business day of the month of your loan.

Paycheck Protection Program loans

The 7(a) program expanded in 2020 to incorporate the Paycheck Protection Program (PPP), an emergency loan program for businesses impacted by the COVID-19 pandemic. Note that PPP loans are no longer available — however, existing borrowers may be eligible for loan forgiveness. The maximum interest rate for loans not forgiven was 1% fixed.

SBA guaranty fees for 7(a) loans

Interest rates on SBA 7(a) loans are lower than those of conventional small business loans because these loans are backed by the federal government. In exchange for a fee, the SBA guarantees a certain portion of each loan — so if borrowers default, lenders are guaranteed to recoup a majority of their funds. The maximum amount they may get back depends on the type of loan and the amount:

  • 85% of 7(a) loans up to $150,000
  • 75% of 7(a) loans of more than $150,000
  • 50% of 7(a) Express loans

How the guaranty fee works

The SBA charges a one-time fee known as a guaranty fee, in addition to an annual service fee. SBA guaranty fees are based on the loan amount and repayment term, but are only charged on the guaranteed amount of the loan. Lenders will initially pay the guaranty fee, but have the option of passing this fee onto the borrower. They cannot pass on the cost of the service fee but are able to collect expenses related to your loan closing.

Here are the guaranty fees for 7(a) loans that have repayment terms exceeding one year:

SBA 7(a) guaranty fee

Loan Amount
Fee
$150,000 or less2% of guaranteed portion
$150,001 to $700,0003% of guaranteed portion
$701,001 to $5 million3.5% of guaranteed portion up to $1 million, plus 3.75% of the guaranteed portion over $1 million

Guaranty fee example

Let's say you receive a $400,000 five-year loan and the SBA guarantees 75%. The guaranteed portion of the loan would be $300,000 ($400,000 x 75%). Since your repayment term is longer than one year, the guaranty fee would be 3%. The total amount paid for the guaranty fee would be $9,000 ($300,000 x 3%).

Current SBA 504 loan rates

The SBA CDC/504 loan is actually composed of two separate loans — one from a bank for 50% or more of the loan amount and one from a Certified Development Company (CDC) for up to 40%. As a borrower, you will be responsible for paying the remaining percentage as down payment (typically 10%, but may be more in some situations).

Here’s a rundown of CDC/504 basics:

  • Amounts up to $5 million, primarily used for commercial real estate, which can include construction, renovation, and purchase of land and/or equipment.
  • Terms of 10, 20 or 25 years.
  • Rates and fees are complicated, but effective rates below give a general idea.

While 7(a) loans can be used for a similar purpose, 504 loans are a better option for most borrowers looking to finance commercial real estate.

How are SBA 504 loan rates calculated?

The effective interest rates set by the SBA are only for the CDC portion of the loan and are fixed. Lenders will set their own rates for their portion of the loan, which are pegged to an increment above the rate for 5- and 10-year U.S. Treasury issues.

SBA CDC/504 loan rates

Here’s the current loan rates for SBA CDC/504 loans.

Term
Effective Interest Rate
10-year3.109%
20-year3.022%
25-year3.168%

As of November 2021

Since these loans are backed by commercial real estate, interest rates will typically be on the lower end. Rates for 504 loans usually reflect the interest rate for five- and 10-year U.S. treasury bonds; your actual rates may be slightly higher or lower.

Fees for 504 loans

The SBA may charge multiple fees to CDCs and the banks or other third-party lenders, some of which may be passed along to borrowers. For fiscal year 2022, the upfront guarantee fee is 0.50% and the yearly service fee is 2.475% of the outstanding balance.

NOTE: Calculating interest rates and fees for 504 loans is a complex process that relies on several factors. Any rates that you see CDCs sharing would be estimates of actual effective interest rates.

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