What Are The Current SBA Interest Rates In 2020?

Edward D. - 2020-10-25T22:00:00.000Z

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In an effort to support the American small business community, the Small Business Administration offers a range of different financing measures at affordable rates. The following loan programs are operated by the SBA:

Standard 7(a)
7(a) small loan
SBA express
Export express
Export working capital
International Trade
The SBA 504 loan program provides financing to purchase fixed assets or expand facilities.

All loans are guaranteed by the SBA and disbursed through a network of lending partners.

How Are SBA Loan Rates Determined?

The interest rate you receive is determined by individual lenders, however, the SBA puts the ceiling on the interest rate a lender can set. Typically, lenders use the Federal Reserve prime rate plus a markup. Your lender’s markup is capped by the SBA, based on the term and size of the loan.

Less frequently, a lender may use the one-month London Interbank Offered Rate (LIBOR), plus 3% rather than the Federal Reserve daily prime rate. You have the power to negotiate the markup with the lender and whether your interest rate will be variable or fixed.

What Are The Latest SBA 7(a) Loan Rates?

7(a) Loans

Maximum loan amount is $5 million
85% guarantee on loans up to $150,000, 75% guarantee for loans greater than $150,000
Funds can be used to purchase real estate, equipment, fixtures, construct facilities, working capital, to refinance debt, purchase inventory, start a new business, or as a seasonal line of credit
Terms depend on the ability to repay, generally 5-10 years for most loans, and 25 years for real estate
Interest rates:

Loans less than 7 years:

$0 - $25,000: Prime +4.25%
$25,001 - $50,000: Prime +3.25%
Over $50,000: Prime +2.25%

Loans more than 7 years:

$0-$25,000: Prime +4.75
$25,001 - $50,000: Prime +3.75%
Over $50,000: Prime +2.75%

To qualify you must meet the SBA definition of a small business, demonstrate credit management, and be able to repay the loan. There’s a prepayment penalty for loans that mature in 15 or more years if prepaid during the first three years.

7(a) Small Loans

Loans under $350,000
All terms are the same. Qualification criteria are the same, except that applicants must be credit scored by the SBA

SBA Express

Loans up to $350,000
SBA guarantee is 50% of the total loan
The total term is 120 months. Revolving lines of credit mature in five years
For loans up to $50,000, interest is Prime +6.5%
For loans over $50,000, interest is Prime +4.5%
Everything else is the same as 7(a) loans

What Are The Latest SBA 504 Loan Rates?

SBA 504 loans are provided through SBA-licensed Certified Development Companies (CDC).

Maximum loan amounts range from $5 million to $5.5 million
Guarantee: Up to 40% guaranteed, 50% non-guaranteed, and 10% plus 5% equity in the new business or 5% equity if the project is a special use property
Fixed-rate long-term loans that can be used to purchase fixed assets for expansion or modernizing facilities, including:
- Purchasing land and making improvements
- Purchase of existing buildings
- Construction of new facilities, or renovating existing facilities
- Purchase of long-term machinery
- Refinancing of debt associated with expanding the business or purchasing assets
SBA provides up to 40% of the total project cost. The participating lender covers up to 50% of total project costs
The borrower contributes 10% of the total project cost. Under special circumstances, the borrower may be asked to contribute up to 20% of the total project cost
Must have no more than $15 million in tangible net worth, an average net income not exceeding $5 million, and not engaged in speculative activities

Lenders Offering Great SBA-Backed Loans

SmartBiz

SmartBiz utilizes innovative software to match borrowers with the most likely SBA-licensed lender to approve their application
SBA-guaranteed loans from $30,000 to $5 million
Interest rates from 4.75% to 7.00% with repayment terms of 10-25 years
SBA will pay principal, interest, and fees for six months on all loans disbursed before September 27, 2020

Funding Circle

Online lending marketplace
Currently processing SBA PPP loans. It follows up with tech support to help you improve your application
Upon completion, Funding Circle refers your application to the most appropriate funding partners

Fundera

Fundera is a small business loan marketplace
A good resource for all small business funding needs, including SBA loans
An online survey helps you quickly determine your eligibility for an SBA 7(a) loan
The site provides guidance on how to apply and connects you with SBA-approved lenders