kate_sept2004/ getty images; Illustrations by Austin Coule Certified/Bankrate
The Federal Reserve is stabilizing interest rates despite higher inflation forecasts. This means that more affordable financing options may not be readily available to small business owners. SBA loans are supported by US Small Business Administrators and have a maximum interest rate that can be much lower than other loans. SBA loan rates tend to be lower than the average business loan rate, but the exact rates a business receives will depend on the lender and the amount of the loan.
SBA 7(a) Loan
SBA 7(a) loans are the most common type of SBA loans. There are several types of 7(a) loans, including:
Most SBA loans are subject to maximum fixed or variable interest rates regardless of the lender. The only exception is export working capital loans, with no maximum rate limit set. Below are the maximum fees for all other types of 7(a) loans.
Interest Rate: SBA 7(a) Adjustable Interest Rate Loan
| 7(a) Loan amount | Maximum Rate |
|---|---|
| Under $50,000 | 14.00% |
| $50,001 to $250,000 | 13.50% |
| $250,001-$350,000 | 12.00% |
| Over $350,000 | 10.50% |
SBA Loan Fees the current March 2025. Calculated at current prime rate of 7.50%.
Interest rate: SBA 7(a) Fixed interest loan
| 7(a) Loan amount | Maximum fixed rate |
|---|---|
| Under $25,000 | 15.50% |
| $25,000-50,000 | 14.50% |
| $50,001 to $250,000 | 13.50% |
| Over $250,000 | 12.50% |
SBA Loan Fees the current March 2025Calculated at the current prime rate of 7.50%.
How to set the SBA 7(a) rate
Like other business loans, interest rates on SBA loans vary depending on the business finances, creditworthiness, size and duration of the loan, lenders you work with, industry and other factors.
The SBA sets maximum fees for fixed and variable loans. This means that your chosen SBA 7(a) loan cannot exceed your establishment rate. The maximum fixed interest rate is published on SBAS FTAWIKI. For variable rate loans, the maximum is the base fee and the set interest rate determined by the maturity date of the loan.
| Loan amount | Variation rate |
|---|---|
| Under $50,000 | Base rate + 6.5% |
| $50,001 to $250,000 | Base rate + 6.0% |
| $250,001-$350,000 | Base rate + 4.5% |
| Over $350,000 | Base rate + 3.0% |
The base fee for variable loans is based on one of the following:
-
Prime Rate: Interest rate based on federal funding rates set by the Federal Reserve
-
Optional PEG Rate: Quarterly issued interest rates by SBA
When comparing loans, try using a business loan calculator to see how different fees affect your monthly payments.
SBA 7(a) Loan Fees
SBA 7(a) Loans do not charge general fees found in other business loans, such as processing fees, sender fees, and application fees. However, you will need to pay a guarantee fee and an annual service fee.
Guaranteed fees help to cover the cost of your SBA if the loan is the default. Service charges compensate lenders for participation and issuance of SBA loans. Lenders cannot pass annual service fees to borrowers.
Most SBA loans are guaranteed up to 85% on loans below $150,000 and up to 75% on loans above $150,000. Express Loans has a maximum guarantee of 50%, and Export Express, Export Working Capital, and International Trade Loans have a maximum guarantee of 90%.
SBA annual service fee
According to the SBA, the fiscal year 2025 (annual service fees based on fiscal year 2025 starting October 1, 2024) is based on the total loan amount.
| Loan amount | New loan service fees |
|---|---|
| Under $500,000 | 0% |
| $500,001 to $1,000,000 | 0.17% of the guaranteed portion of outstanding loan balance |
| $1,000,001 to $5,000,000 | 0.55% of the guaranteed portion of outstanding loan balance |
SBA Guaranteed Fees
Below are the SBA guarantee fees for short-term loans that will be rewarded within 12 months under fiscal year 2025:
| Loan amount | Guaranteed fees for loan terms under 12 months |
|---|---|
| Under $1,000,000 | 0% |
| Greater than $1,000,001 | 3.50% of the guaranteed portion up to $1,000,000. Plus, 3.75% of the guaranteed portion exceeding $1,000,000 |
The SBA guarantee fees for loans that take more than 12 months to be rewarded based on the fiscal year 2025 are as follows:
CDC/504 Loan
The SBA 504 loan is available through a certified development company (CDC). The CDC is accredited by the SBA to regulate nonprofit organizations and promote economic development in the community. The CDC will help you collect what you need for a 504 loan and find the right lender.
The 504 Loan is a long-term fixed-rate loan to help your business grow. It can be used for major fixed assets such as purchasing land, buildings, machinery, equipment, etc. However, it cannot be used to purchase working capital or stock.
CDC/504 Loan Terms
The terms of the loan for a 504 loan are 10, 20, or 25 years. The maximum loan amount for 504 is $5.5 million. Similar to SBA 7(a) loans, 504 loans will have maximum interest rates and additional charges.
How to set up a SBA 504 loan fee
Companies will need to pay a 10% down payment on a 504 loan. From there, the CDC funds 40% of the loans, and the selected lenders fund 50%. The SBA guarantees 40% funded by the CDC.
The lender will set loan terms and interest rates, but is subject to the SBA standard. The interest rate for a 504 loan is typically 3% of total debt, determined by the current market rates of the US Treasury over the course of 10 years. The fee for the 504 loan can be included in the funding amount.
