For many small-business borrowers, SBA loans are some of the best loans a business owner can get. SBA loan interest rates, loan terms and loan amounts are some of the best. SBA loans are perfect for working capital, property purchases, inventory purchases and business acquisition.
|SBA loan size||7(a) loan paid off in under 7 years *||7(a) loan paid off in over 7 years *|
|$25,000 or less||8.50%||9%|
|$25,001 to $50,000||7.50%||8%|
|More than $50,000||6.50%||7%|
|*Rates calculated with the current prime rate of 4.25%|
Most lenders under the Small Business Administration or SBA program lend based on a variable rate that is fixed to the current prime rate. The 7(a) loan is the SBA’s most popular loan product. It can be used for working capital, business acquisitions and commercial property. It is typically the best loan product for small and medium sized businesses. Loans below $350,000 qualify for the SBA 7(a) express program. Although widely regarded and known as the best loan product out there for American businesses, the popularity of the loan product has reduced because of the burdensome paperwork that is often required to complete a SBA 7(a) loan application. New services like GoSBALoans.com have automated a majority of the paperwork required to finish a typical SBA 7(a) loan application. If you are interested in applying for an SBA loan, use this link to start your application. Your application will be automatically sent to more than 35 banks.
Business borrowers that are slightly larger (typically industrial customers with at least $3-5 million in revenue) can also find low-cost and fixed-rate financing for land and equipment through with SBA’s 504 loan program.
The SBA sets interest rate guidelines for lenders, which helps keep small-business owners’ borrowing costs low.
How SBA loan rates are set: Interest rates for SBA 7(a) loans are calculated based on adding a lender spread to the daily prime rate set by the Federal Reserve. The spread is negotiated between the borrower and the lender. Given the large number of applications and loans we fund with our partner banks, our customers benefit from lender spreads of less than 1% compared to the national average of 2.5-3%.
“Interest rates for SBA 7(a) loans are the daily prime rate, which changes based on actions taken by the Federal Reserve, plus a lender spread. GoSBA Loans customers benefit from lender spreads of less than 1% compared to the national average of 2.5-3%.”
7(a) loan guaranty fees are based on the loan amount and maturity date and apply only to the guaranteed portion of the loan or the loan amount that is guaranteed by the US government. Applicants are required to pay the SBA guaranty fee, but this fee can be easily financed.
You’ll pay no guaranty fee if your loan is less than $150,000. If the loan amount is more than $150,000, the borrower be charged based on a three-tier system:
- 3% on loans of between $150,000 and $700,000
- 3.5% on loans of between $701,000 and $1 million
- 3.75% on loans of more than $1 million
SBA Loan Rates
SBA 7(a) Loan Terms:
Here’s a breakdown of SBA business loan terms and rates, including interest and fees:
- 7(a) loans do not have a minimum loan amount and max out at $5 million.
- The average SBA loan was around $374,000 in 2015.
- The SBA guarantees 85% of your loan if it’s less than $150,000 and 75% if it’s more than $150,000.
- SBA loans used to require a lot of paperwork, but services like GoSBA Loans are finally making it easy to qualify for a SBA loan.
SBA 7(a) Working Capital Loans (10 Years)
|Loan size||$25,000 or less||$25,001 – $50,000||More than $50,000|
|Maximum 7(a) interest rate||*Prime + 4.25%||*Prime + 3.25%||*Prime + 2.25%|
|GoSBA Loans 7 (a) interest rate||*Prime + 2%||*Prime + 2%||*Prime + 1.5%|
SBA 7(a) Commercial Real Estate Loans (25 Years)
|Loan size||More than $50,000|
|Maximum 7(a) interest rate||*Prime + 2.75%|
|GoSBA Loans 7 (a) interest rate||*Prime + 1%|
*The prime rate, hiked in June 2017, is 4.25%.
Example: The maximum interest rate for an SBA loan of $1 million for a commercial property is 7% but with GoSBA Loans the rate is almost 40% cheaper at just 5.25%. We also offer a price guarantee, no other online lender or SBA lender can beat our interest rate. If you are interested in applying for an SBA loan, use this link to start your application. Your application will be automatically sent to more than 35 banks.
Business borrowers looking to buy land, buildings or major equipment with long-term, fixed-rate financing can apply for SBA 504 loans. These loans are partially funded by certified development companies, nonprofit organizations focused on community economic development. The loans require collateral, typically the assets that are being financed, as well as personal guarantees from the principal borrowers.
“These loans are partially funded by certified development companies, nonprofit organizations focused on community economic development.”
504/CDC SBA Loan Terms:
- 504 loans are available in 10- or 20-year terms: As of August 2017, 10-year term loans had an effective interest rate of 4.49% and 20-year term loans had an effective interest rate of 4.53%.
- Fee percentages are fixed but reset every five years based on principal, often resulting in a lower payment for the borrower.
- The minimum loan amount is $50,000; the maximum is $5.5 million.
How 504 loan rates are set: Small-business owners seeking a 504 loan are on the hook for a down payment of at least 10% of the cost of the project. A traditional lender, such as a bank, puts up 50% of the loan, and a certified development company puts up as much as 40%. The SBA guarantees 100% of the CDC portion of the loan.
SBA 504 loan terms are primarily made up of the following:
- The Treasury bond rate: Loans with 10-year terms are priced based on the five-year Treasury bond, while loans with 20-year terms are based on the 10-year Treasury bond.
- A guaranty fee that is paid to the SBA.
- A servicing fee that is paid to the CDC.
- A fee paid to the central servicing agent.
When applying, you’ll be quoted an effective interest rate, which is the sum of those three fees and the Treasury bond rate. However, you’ll also pay a one-time fee of 2.15% to the SBA, as well as some additional fees, meaning your total cost of borrowing (or annual percentage rate) will be slightly higher than your effective rate.
Applying For An SBA Loan
SBA loans give you the best interest rates, though the application process can be complicated and time-consuming. GoSBA Loans and our online platform has completely solved this problem. We have effectively reduced the time it takes to complete a successful application from 35 hours to just one hour. The application is completely online and only has to be filled out just once. We automatically circulate the application to 35 lenders, automatically giving you the best interest rates and terms. There are online lenders that might lend faster but getting an SBA loan is almost always the best choice for any business that can qualify, especially when it comes to larger commercial property and working capital loans. Please use this link to start your application. Our team is waiting to help you!
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