Are SBA Loans Fixed? Definition and Current Rates

January 27, 2022 Editor

SBA loans are a type of loan that the federal government guarantees. The SBA (Small Business Administration) was created to help small businesses get financing that they may not get otherwise. SBA loans can be used for various purposes and come in many forms, including lines of credit, long-term loans, and more. According to Lantern by SoFi, “Part of considering small business loans and other financing options for your company is knowing how much you’ll pay in interest over the term of the loan. A $10,000 loan, for example, will cost you more than $10,000 when you factor in the annual percentage rate (APR) you pay on top of it.”

The Different Types of SBA Loans

1. SBA Loan Rates for the 7(a) Loan Program

The SBA 7(a) loans are available in amounts of $10,000 to $5 million. They have terms that range from 10 to 25 years. The minimum down payment is 5 percent, and the maximum financing amount is based on the borrower’s creditworthiness.

Are the rates on the SBA 7a loans fixed?

The current SBA 7a loan rates range from 3.76 percent to 6.00 percent, depending on the loan and lender fees. Some lenders may offer rates below these rates, but they may require a higher down payment or other considerations.

2. SBA Loan Rates for the CDC/504 Loan Program

The 504 loans are available in amounts of up to $5 million with terms of 20 years (up to 25 years for real estate projects). The minimum down payment is 5 percent. However, some borrowers may put as little as 3 percent down if they have an SBA-guaranteed commercial mortgage loan with a first lien position on the property being financed (this means that the property secures the loan).

The maximum financing amount for a CDC/504 loan depends on the total project cost. The current SBA 504 loan rate ranges from 4.75 percent to 6.00 percent, depending on lender fees and the loan amount.

3. SBA Loan Rates for the Microloan Program

7(m) loans are available in amounts up to $5 million with terms of up to 25 years (up to 30 years for real estate projects). The minimum down payment is 5 percent. The maximum financing amount for a 7(m) loan depends on the total project cost and the borrower’s creditworthiness. The current 7(m) loan rate ranges from 4.75 percent to 6.00 percent, depending upon lender fees and the loan amount

How to Apply and Qualify for an SBA Loan?

You can apply for an SBA loan by contacting a Small Business Development Center (SBDC) in your area or by visiting the SBA’s website at www.sba.gov and clicking on the “Loan Programs” link. The SBDCs are nonprofit organizations funded through an agreement with the SBA to provide counseling services to small businesses in their communities. You can also find information about loans on the SBA’s website.

The Women’s Business Center Program provides free, one-on-one counseling and training services to help women start and expand their businesses.

To qualify for an SBA loan, you must have a viable business idea, demonstrate the ability to repay the loan, and have a good credit history. The SBA has developed a set of criteria that helps lenders evaluate your business plan.