SBA loan rates in November 2018 | finder.com
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SBA loan rates in November 2018

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Find the latest rates for these popular small business loans

Business loans backed by the Small Business Administration (SBA) are known for offering some of the lowest rates out there. While your lender ultimately decides the rates your business is eligible for, the SBA caps how high those rates can get. However, your business will need to meet some stringent criteria in order to qualify.

Maximum SBA 7(a) loan rates: 7.25%–9.75%
Maximum CDC/504 loan rates: 3.012%–3.07%

SBA 7(a) loan rates for November 2018

The maximum rate for the popular 7(a) loan program depends on your loan amount and term. Generally, lower amounts and longer terms come with higher rates.

Loan amountMaximum rate for less than 7 yearsMaximum rate for 7+ years
$0 to $25,0009.25%9.75%
$25,001 to $50,0008.25%8.75%
Over $50,0007.25%7.75%

Source: www.sba.gov

SBA 7(a) loans come with both fixed and variable rates. Fixed rates stay the same over the life of your loan, while variable rates can fluctuate with the market. The interest rate caps apply to both types of rates, however.

Maximum rates apply to SBA 7(a) programs, which include:

  • Standard 7(a) loans
  • 7(a) Small Loans
  • CAPLines
  • SBA International Trade Loans

SBA 7(a) Express loan rates

SBA 7(a) Express loans come with rates that differ from your typical 7(a) loan. Loan terms don’t affect the rate of an Express loan — only the loan amount.

Like with other 7(a) loans, larger loan amounts come with lower maximum rates.

Loan amountMaximum interest rate
$0 to $50,00011.5%
Over $50,0009.5%

Source: www.sba.gov

SBA 7(a) Express loan rates apply to loans that include:

  • SBA Express loans
  • SBA Veterans Advantage loans
  • Export Express loans

CDC/504 loan rates for November 2018

CDC/504 loans can be more complicated than 7(a) loans. That’s because they’re made up of two loans: At least 50% of your financing can come from a bank or other SBA lender. Up to 40% can come from a nonprofit Certified Development Company (CDC) licensed by the Small Business Administration. The remaining 10% comes from your business, with no interest rate.

LenderMaximum interest rate
CDC 10-year loan3.012%
CDC 20-year loan3.07%
Bank loan
11%

Source: www.federalregister.gov

The maximum rate a bank can charge through the CDC/504 Loan Program is 11%. However, some state laws override the maximum interest rate for a lower one.

The value of US Treasury bonds determine the rates on the CDC’s part of your loan.

SBA Microloan rates

If you’re getting a microloan through a nonprofit instead of your standard 7(a) lender, your interest rate depends on how much it costs your lender to fund your loan and how much you’re borrowing:

  • Interest on microloans of up to $10,000 — cost of funds + 8.5%
  • Interest on microloans of $10,000 or more — cost of funds + 7.75%

Compare SBA loan providers

Rates last updated November 20th, 2018
Unfortunately, none of the business loan providers currently offer loans for these criteria.
Name Product Product Description Min Loan Amount Max. Loan Amount Requirements
SmartBiz SBA Loans
Get funding for your small business with a government-backed loan and extended repayment terms.
$30,000
$5,000,000
650+ personal credit score, US citizen or permanent resident, 2+ years in business, $50,000+ annual revenue, no outstanding tax liens, no bankruptcies or foreclosures in past 3 years
National Business Capital Business Loans
Get a large business loan to cover your financing needs, no matter what the purpose is. Startups welcome with 680+ credit score.
$10,000
$5,000,000
Your company must have been in business for at least 6 months and have an annual revenue of at least $180,000.
Excel Capital Management Small Business Loans
Get personalized financing options that suit your unique business needs in just a few simple steps.
Varies by loan type
Varies by loan type
Your business must operate in the US, be at least 1 year old and have monthly revenue of $15,000+.
LendingTree Business Loans
Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
Varies by lender and type of financing
Varies by lender and type of financing
Varies by lender, but you many require good personal credit, a minimum business age and minimum annual revenue.

Compare up to 4 providers

How does the SBA calculate maximum rates?

Each Small Business Administration loan program has its own way of calculating maximum rate for loans in that program. Rates can also vary by SBA lender.

How the SBA calculates 7(a) rates

Maximum interest rates on SBA 7(a) loans are commonly based on the prime rate plus additional interest — even for fixed-rate loans.

The prime rate is a type of benchmark rate published in the Wall Street Journal. Benchmark rates depend on what lenders are charging their most creditworthy customers. The additional interest is a fixed rate that lenders can charge on top of the prime rate, which is currently 5%.

Loan amountMaximum rate for less than 7 yearsMaximum rate for 7+ years
$0 to $25,000Prime rate + 4.25%Prime rate + 4.75%
$25,001 to $50,000Prime rate + 3.25%Prime rate + 3.75%
Over $50,000Prime rate + 2.25%Prime rate + 2.75%

Source: www.treasury.gov

How the SBA calculates CDC/504 rates

The maximum bank rate for a CDC/504 loan is the same as that for a 7(a) loans, but how much a CDC can charge is challenging to calculate on your own.

To understand how it works, you first need to know what a debenture rate is. SBA 504 loans are funded by the sale of debentures, common long-term loans taken out by corporations or investors. Rates that come with debentures work a lot like interest rates, and they’re based on bonds issued by the US Department of Treasury and sold on Wall Street.

What does this mean to you? If you take out a 10-year CDC loan in September 2018, your interest is based on the five-year treasury yield on September 3, 2018 — or the first business day of the month.

To calculate the debenture rate, you add to the interest rate another fixed rate called a swap spread. Both are published online and vary depending on the bond market.

RateHow the SBA calculates the maximum rate
CDC 10-year loan5-year treasury rate for the first of the month (2.87%) + swap spread (0.142%)
CDC 20-year loan10-year treasury rate for the first of the month (3%) + swap spread (0.07%)
Bank loanPrime rate + 6%

Source: www.treasury.gov

Some lenders roll a portion of your CDC fees into your interest rate. This is called the effective rate. Effective rates are typically between 1.5% and 2% higher than the 10-year treasury yield.

What other costs should I consider?

Interest rates are among the top factors you look at when getting a loan, but it’s not all the potential costs to consider. SBA loans in particular can come with multiple fees charged by the government or your lender. Typically, you pay a fee to the SBA for backing your loan, though how that fee is calculated will depend on your program.

SBA 7(a) fees

The main fee associated with the 7(a) program is the SBA guaranty fee. An SBA guaranty fee offsets the risk the Small Business Administration takes on when backing your loan.

How much you pay depends on the portion of the loan that’s backed by the SBA — not your total loan amount. If the SBA guarantees 85% of a $100,000 loan, for instance, you’d pay a guaranty fee on $85,000.

Guaranteed amountGuaranty fee
$125,000 or less and all veteran loans$0
$125,000 to $150,0002%
$150,001 to $700,0003%
$700,001 to $5 million3.5% up to $1 million, plus 3.75% on any amount over $1 million

Source: www.sba.gov

SBA 7(a) loans also come with annual service fees that you pay on your outstanding balance each year. Today, that fee is 0.55% of the loan balance for all loan amounts.

CDC/504 fees

CDC/504 borrowers don’t pay an SBA guaranty fee to get their funds, but they do pay an annual fee to the SBA on their loan balance. Borrowers also pay a fee to the Central Servicing Agent — like a loan servicer — every five years.

The CDC might charge a fee when releasing your funds as well as a monthly service fee. Banks typically charge only one fee when you get your funds, called a lender participation fee.

Type of feeMaximum costWhen you pay it
Lender participation fee0.5% of the lender-funded amountWhen you get your funds
CDC participation fee1.5% of the CDC-funded amountWhen you get your funds
CDC annual service fee0.625%–2% of loan balanceEvery year
Central Servicing Agent fee0.1% of the outstanding balance per yearEvery month

Source: www.sba.gov

SBA down payments

Your business may also be required to partly front the costs of the project you need the SBA loan for — called a down payment or an injection. With SBA 7(a) and 504 loans, businesses are required to put down around 10% of the loan amount.

How much you pay as a down payment depends on your personal credit score, loan amount and lender.

Bottom line

A loan backed by the Small Business Administration can help you land some of the most competitive rates on the market. But these popular loans also come with a higher rejection rate than any other type of business financing.

To learn more about how to finance your business, read our comprehensive guide to business loans.

Frequently asked questions

Rates are sourced from: www.sba.gov, www.treasury.gov and www.federalregister.gov

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