Most SBA 7(a) loan rates are variable and expressed as the Prime rate plus a lender margin — for example, “Prime + 2.75%.” When the Prime rate moves (it tracks the Federal Reserve’s federal funds rate), your loan rate moves with it, typically adjusting monthly or quarterly. The SBA caps how large the margin can be, with the cap depending on loan size and term — smaller and shorter loans can carry a somewhat higher margin than larger, longer ones. Through the lenders Radix Financial Group works with, SBA 7(a) and SBA Express rates start around 9%.
The SBA 504 program is different: the bank’s roughly 50% piece carries the bank’s own rate, while the CDC’s roughly 40% piece (the SBA-backed debenture) carries a long-term fixed rate — through Radix’s lenders, owner-occupied commercial real estate financing runs roughly 6.8% to 8%. There’s also a non-SBA owner-occupied option through Radix’s lenders at rates as low as 6.5%.
Your specific rate within the allowed range depends on loan size (larger loans tend to price tighter to Prime), term, your credit and cash flow, collateral, and the lender. There’s also a one-time SBA guarantee fee — a percentage of the guaranteed portion, scaled by loan size — which is typically financed into the loan rather than paid out of pocket. On 7(a) loans with terms under 15 years, there’s no prepayment penalty.
Radix has facilitated more than 3,500 SBA loans and over $700 million in funding across all 50 states, and a big part of the value is shopping the file to the lender offering the best rate-and-terms combination for that borrower’s profile.
Key facts at a glance
The Wall Street Journal Prime rate is the most common base for SBA 7(a) loans. Prime moves in lockstep with the Federal Reserve’s federal funds rate — when the Fed raises or cuts, Prime follows, usually within a day. So an SBA 7(a) loan priced at “Prime + a margin” gets cheaper when the Fed cuts and more expensive when it hikes.
On top of Prime, the lender adds a margin — their compensation for making and servicing the loan. The SBA caps this margin, and the cap is tiered: smaller loans and shorter terms are allowed a somewhat higher maximum margin than larger loans and longer terms. (The reasoning: small loans cost about the same to underwrite as big ones, so the margin has to be wider to make them worthwhile.) Within the cap, the actual margin a lender offers reflects your risk profile and how badly they want the loan.
The large majority of SBA 7(a) loans are variable-rate, adjusting monthly or quarterly with Prime. Fixed-rate 7(a) loans exist but are less common and usually price higher at the outset. If you specifically want a fixed rate on real estate, the 504 program’s CDC debenture is the place to get one.
A 504 loan has two pieces with two rates:
Through the lenders Radix works with, owner-occupied commercial real estate financing under the 504 structure runs roughly 6.8% to 8%, with a 25-year term and up to 90% LTV. There’s also a non-SBA owner-occupied program at rates from about 6.5% (up to 80% LTV, 23 states) for borrowers who’d rather skip the SBA process. Full 504-vs-7(a) comparison for real estate.
Besides interest, an SBA 7(a) loan carries a one-time guarantee fee — a percentage of the guaranteed portion of the loan, scaled by loan size (larger loans, higher percentage; the smallest loans sometimes have it reduced or waived in a given year). It’s almost always financed into the loan rather than paid out of pocket at closing, so it doesn’t hit your cash — it just slightly increases the amount you’re repaying. There’s also a smaller annual servicing fee built into the structure. Compared with the cost of the alternatives — especially a merchant cash advance — these fees are minor.
SBA 7(a) loans with terms under 15 years have no prepayment penalty — pay it off early, refinance, or sell the business without penalty. Loans with terms of 15 years or more (typically real estate) carry a declining prepayment penalty in the first three years (5% / 3% / 1% of the prepaid amount). For most working-capital and debt-refi borrowers, the no-penalty rule applies.
Because Radix works with a network of preferred SBA lenders and knows each one’s pricing appetite, the team can put your file in front of the lender most likely to offer the best rate-and-terms combination for your profile — while still actually approving and closing the loan. Through Radix’s lenders, SBA Fast Track Express and Traditional SBA 7(a) rates start around 9%, commercial real estate from about 6.5%, and a business line of credit from about 5.35%. Use the loan calculator to estimate a monthly payment, then pre-qualify to see real numbers.
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How are SBA loan interest rates set?
Most SBA 7(a) loan rates are variable, expressed as the Prime rate plus a lender margin (for example, ‘Prime + 2.75%’). When the Prime rate moves — it tracks the Federal Reserve’s federal funds rate — your loan rate moves with it, typically adjusting monthly or quarterly. The SBA caps the margin, with the cap depending on loan size and term.
What is the interest rate on an SBA loan?
Through the lenders Radix works with, SBA 7(a) and SBA Express loans start around 9%. SBA 504-structured commercial real estate financing runs roughly 6.8% to 8% (with the CDC portion at a fixed rate), and a non-SBA owner-occupied real estate option is available from about 6.5%. The exact rate depends on loan size, term, credit, cash flow, collateral, and the lender.
Are SBA loans fixed or variable rate?
The large majority of SBA 7(a) loans are variable-rate, adjusting with the Prime rate. Fixed-rate 7(a) loans exist but are less common and usually price higher at the outset. For a fixed rate on commercial real estate, the SBA 504 program’s CDC debenture provides one for the full term (often 25 years).
Why do smaller SBA loans sometimes have higher rates?
Because the SBA’s margin cap is tiered — smaller loans and shorter terms are allowed a somewhat higher maximum margin over Prime than larger, longer loans. A small loan costs about as much to underwrite as a big one, so a wider margin makes it worthwhile for the lender.
What fees come with an SBA loan?
The main one is a one-time SBA guarantee fee — a percentage of the guaranteed portion of the loan, scaled by loan size, usually financed into the loan rather than paid at closing. There’s also a smaller annual servicing fee built into the structure, plus standard closing costs. Compared with the cost of alternatives like a merchant cash advance, these fees are minor.
Is there a prepayment penalty on an SBA loan?
Generally no — SBA 7(a) loans with terms under 15 years have no prepayment penalty. Loans with terms of 15 years or more (typically real estate) carry a declining prepayment penalty in the first three years: 5% of the prepaid amount in year one, 3% in year two, 1% in year three.
Will my SBA loan payment change over time?
If it’s a variable-rate 7(a) loan — which most are — then yes, the rate and payment adjust as the Prime rate moves, typically monthly or quarterly. The margin over Prime stays fixed for the life of the loan; only the Prime base changes. SBA 504’s CDC portion is fixed, so that part of the payment doesn’t change.
How do I compare SBA loan offers?
Compare the margin over Prime (not just the headline rate, since the headline moves with Prime but the margin is fixed for the life of the loan), confirm fixed vs. variable, check the term (a longer term can mean a lower monthly payment even at a slightly higher rate), add up all fees and confirm what’s financed vs. paid at closing, and check the prepayment terms. Don’t chase a tiny rate difference at the cost of approval or speed.
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Radix Financial Group and its affiliates are not lenders participating in SBA’s 7(a) loan program. Radix is a marketplace to help business owners obtain SBA 7(a) loans. Said loans are ultimately processed and approved by a lender participant in SBA’s 7(a) loan program.