Business Loans
SBA Loans Interest Rates 2025
A Detailed Guide to Current SBA Loan Rates, Fees, and How to Evaluate Them for Your Business
- Dileep K Nair
- July 9, 2025
Table of Contents
As of May 2025, SBA loan interest rates remain a focal point for small business owners seeking affordable financing options. The U.S. economy continues to navigate a complex landscape characterized by persistent inflation, a resilient labor market, and cautious monetary policy.
These factors collectively influence borrowing costs, including those associated with SBA-backed loans.
The Federal Reserve has maintained its benchmark federal funds rate within the range of 4.25% to 4.5% during its recent meetings, opting for a steady approach amid economic uncertainties.
This decision reflects ongoing concerns about inflationary pressures and the potential impact of geopolitical developments on the global economy. Consequently, the Prime Rate, which serves as a foundational benchmark for many lending products, including SBA loans, remains at 7.5% as of May 2025
In this context, SBA loan interest rates have experienced corresponding adjustments.
SBA 504 loan rates, which are influenced by debenture sales and Treasury yields, have seen variations.
✅ What Are SBA Loan Interest Rates and Why Do They Matter?
SBA loan interest rates are the cost of borrowing funds through loan programs backed by the U.S. Small Business Administration.
These rates are not set by the SBA itself, but the agency does set maximum limits to ensure that lenders offer fair terms to small businesses.
Lenders determine actual interest rates based on:
- The Prime Rate(as set by the Federal Reserve)
- A mark-upor “spread” allowed by the SBA
- The borrower’s credit score and financial health
- The loan amount and repayment term
These factors together shape the final interest rate a borrower receives.
Understanding these elements is important because even a 1% difference in interest can significantly impact the total loan cost over time.
Current SBA 7(a) Loan Interest Rates
SBA 7(a) Loan Rates (2025)
The 7(a) loan is the most flexible and widely used SBA loan program. It supports working capital, equipment purchases, expansion, and business acquisition. These loans may carry fixed or variable interest rates, depending on the lender and terms.
As of Q2 2025, the Prime Rate is 7.5%. Lenders can add a maximum spread based on the loan size and term.
Variable Interest Rates:
| Loan Amount | Maximum Interest Rate (Prime +) | Total Maximum Rate |
| $50,000 or less | 6.5% | 14.0% |
| $50,001 – $250,000 | 6.0% | 13.5% |
| $250,001 – $350,000 | 4.5% | 12.0% |
| $350,001 or more | 3.0% | 10.5% |
SBA 7(a) Fixed Interest Rates:
| SBA 7(a) Loan Amount | Maximum Interest Rate (Prime +) | Total Maximum Rate |
| $25,000 or less | 8.0% | 15.5% |
| $25,001 – $50,000 | 7.0% | 14.5% |
| $50,001 – $250,000 | 6.0% | 13.5% |
| $250,001 or more | 5.0% | 12.5% |
Current SBA 504 Loan Interest Rates
The SBA 504 program focuses on long-term financing for fixed assets such as real estate and machinery.
These loans are structured differently, involving two lenders, usually a Certified Development Company (CDC) and a bank.
These rates for SBA 504 / CDC Loans are determined by adding a spread to the current market rate of 10-year U.S. Treasury issues.
As of May 2025:
| Term | Rate (CDC Portion) |
| 10 years | 6.20% |
| 20 years | 6.41% |
| 25 years | 6.39% |
The bank portion may have a separate fixed or variable rate, often between 6% and 8%, depending on your agreement.
Current SBA Microloan Interest Rates
Microloans are small loans of up to $50,000 offered through nonprofit community lenders. Rates are usually between 8% and 13%, depending on the intermediary lender’s policies and the borrower’s qualifications.
Unlike 7(a) or 504 loans, the SBA does not cap rates for microloans. However, most lenders aim to keep rates affordable to serve startups and underserved communities.
SBA 7(a) Loan Fees
Upfront Guarantee Fee (One-Time)
The total loan amount determines the percentage that is used to calculate this fee. However, the Upfront Fee is based on the guaranteed portion of the loan and not the total loan amount.
a) Long Term Loans (Maturity Above 12 Months)
Maximum Upfront Guarantee Fee Table on SBA 7(a) Loans
| Loan Amount | Fee |
| Up to $150,000 | 2.0% of the Guaranteed Portion |
| $150,001 – $700,000 | 3.0% of the Guaranteed Portion |
| $700,001 – $5 million | 3.5% of the Guaranteed Portion up to $1,000,000 + 3.75% of the Guaranteed Portion above $1,000,000. |
b) Short-term Loans (Maturity 12 Months or Less)
SBA 7(a) Short Term Loans – up to $5 million- 0.25% of the guaranteed portion
Annual Service Fee:
For loans over $500,000, an annual fee of 0.55% is charged on the guaranteed portion of the outstanding balance.
SBA 504 Loan Fees
In FY2025, the SBA has waived most fees on 504 loans:
- Upfront SBA guarantee fee:Waived
- Annual service fee:Waived
- CDC processing fees:May still apply, usually between 1.5% – 2% of the loan amount
SBA Microloan Fees
Microloan lenders may charge:
- A one-time loan packaging or processing fee
- Interest charges based on the lender’s internal rate
- No SBA-imposed fees apply to microloans directly
How SBA Loan Rates Compare to Traditional Business Loans
Compared to conventional loans, SBA loans offer more affordable interest rates and longer repayment terms, making them suitable for small businesses looking for manageable payments.
| Loan Type | Typical Interest Rate | Repayment Term |
| SBA 7(a) Loans | 9%–12.5% | Up to 25 years |
| SBA 504 Loans (CDC) | 5%–6.5% | 10–25 years |
| SBA Microloans | 8%–13% | Up to 6 years |
| Traditional Bank Loans | 10%–18% | Up to 7 years (usually) |
Banks may offer lower rates for highly qualified borrowers but often require higher credit scores, strong collateral, and faster repayment timelines.
How SBA Loan Interest Rates Are Set
Understanding how SBA loan interest rates are determined can help you better evaluate loan offers and prepare for discussions with lenders. While SBA loans are known for their affordable rates, it is important to note that the SBA does not directly set the final interest rate you receive.
Instead, it provides a structure within which lenders operate. Let’s break down the process and the key elements involved.
1. The Role of the Base Rate
At the foundation of all SBA loan rates is the base rate, which is typically the Prime Rate. The Prime Rate is the interest rate that commercial banks charge their most creditworthy clients and is influenced by actions taken by the Federal Reserve.
For example, in 2025, the Prime Rate is 7.5%, and this forms the starting point for most SBA loan rate calculations. Some lenders may use other base rates, like the LIBOR or SBA Peg Rate, but the Prime Rate is the most common.
2. The SBA’s Maximum Allowable Spread
While the SBA does not set your exact interest rate, it caps the amount that lenders can add to the base rate. This additional percentage is called the “spread”, and it compensates the lender for risk, servicing, and administrative costs.
The maximum spread allowed depends on the loan amount and whether the loan has a fixed or variable rate:
The final rate = Base Rate (Prime) + Lender’s Spread (within SBA limits)
3. Lender’s Discretion Based on Risk Profile
Even within SBA guidelines, your final rate is determined by how the lender evaluates your risk profile. Factors that lenders consider include:
- Personal and business credit scores
- Debt-to-income ratios
- Cash flow history
- Loan purpose and amount
- Collateral availability
Stronger applicants—those with consistent revenue, high credit scores, and solid business plans—may qualify for rates closer to the lower end of the allowable range.
4. Program-Specific Structures
Each SBA loan program may have unique structures for setting rates:
- SBA 7(a)loans can have either fixed or variable rates depending on the lender and borrower agreement.
- SBA 504loans usually have fixed rates, especially for the CDC (Certified Development Company) portion of the loan. The bank portion of the 504 loan may vary depending on the lender.
- SBA Microloansare administered by nonprofit intermediaries, who have more flexibility in setting rates. These usually fall between 8% and 13%, depending on the lender and region.
Factors That Influence Your SBA Loan Interest Rate
Every borrower may receive a different rate depending on several risk and profile factors:
- Prime Rate Trends
SBA loan rates are tied to the Prime Rate, which reflects broader economic conditions and monetary policy. If the Federal Reserve increases rates to combat inflation, SBA loan rates typically rise too.
- Loan Type and Amount
Smaller loans usually carry higher rates because they are costlier to process and carry more risk for the lender. Larger loans often come with tighter margins and lower rates.
- Loan Term Length
Longer terms (like 25 years) typically have higher interest rates than shorter terms. However, monthly payments are lower due to extended repayment periods.
- Credit Score
Both personal and business credit scores affect your rate. A strong credit score (700+) may qualify you for rates closer to the minimum, while lower scores can result in higher rates.
- Collateral
Well-secured loans (backed by real estate or equipment) often qualify for better rates compared to unsecured loans.
- Lender Discretion
While the SBA sets limits, the actual rate offered depends on how your lender evaluates your risk. Having a relationship with a lender or a complete application package can help.
Tips to Get the Best SBA Loan Rates in 2025
- Improve your credit score:Pay down debts, correct errors, and keep accounts in good standing.
- Prepare complete documentation:A well-organized loan package with financials, tax returns, and a solid business plan shows professionalism.
- Choose the right SBA program:Apply for the loan that matches your purpose. For example, 504 loans for fixed assets usually have better rates than 7(a) loans for working capital.
- Work with an SBA-preferred lender:These lenders have experience processing SBA loans and can guide you more effectively.
- Offer collateral when possible:Even if not required, pledging collateral may help reduce the interest rate.
SBA Loan Rates- Frequently Asked Questions (FAQs)
As of May 2025, SBA loan interest rates vary depending on the loan program and specific terms:
- SBA 7(a) Loans: These loans typically have variable interest rates tied to the prime rate. The maximum allowable rates are:
- 0%for loans of $50,000 or less
- 5%for loans between $50,001 and $250,000
- 0%for loans between $250,001 and $350,000
- 5%for loans over $350,000
- SBA 504 Loans: These loans offer fixed interest rates. Current rates are approximately:
- 2% to 6.41%for the CDC portion of the loan
- SBA Microloans: Interest rates for microloans typically range from 8% to 13%, depending on the intermediary lender and borrower qualifications.
Please note that these rates are subject to change based on economic conditions and lender policies.
It's advisable to consult with an SBA-approved lender for the most current rates applicable to your specific situation.
SBA loan interest rates can be either fixed or variable, depending on the loan program and lender terms:
- SBA 7(a) Loans: These loans may have fixed or variable rates. Variable rates are tied to the prime rate plus a permissible spread, and they can adjust quarterly. Fixed rates remain constant throughout the loan term.
- SBA 504 Loans: The portion of the loan funded by the Certified Development Company (CDC) typically has a fixed interest rate, providing predictable monthly payments. The portion funded by the bank may have a fixed or variable rate, depending on the lender's terms.
- SBA Microloans: These loans usually carry fixed interest rates, offering stability for small business borrowers.
Borrowers should discuss rate options with their lenders to choose the structure that best fits their financial planning and risk tolerance.
The frequency of interest rate changes for SBA loans depends on whether the loan has a fixed or variable rate:
- Fixed-Rate Loans: The interest rate remains the same throughout the life of the loan, providing consistent monthly payments.
- Variable-Rate Loans: For SBA 7(a) loans with variable rates, adjustments typically occur on a quarterly basis. The rate is tied to the prime rate, and any changes in the prime rate can lead to adjustments in the loan's interest rate.
It's important for borrowers with variable-rate loans to monitor economic indicators and prime rate trends, as these can impact their loan payments over time.
While the SBA sets maximum allowable interest rates for its loan programs, the actual rate offered to a borrower is determined by the lender within those limits. Factors influencing the negotiated rate include:
- Creditworthiness: Higher credit scores may qualify for lower rates.
- Business Financials: Strong financial statements and cash flow can be favorable.
- Collateral: Offering collateral may help secure a better rate.
- Loan Amount and Term: Larger loans or shorter terms might influence the rate.
Engaging in discussions with multiple SBA-approved lenders and presenting a robust loan application can enhance the potential for securing a more favorable interest rate.
Yes, SBA loan interest rates vary depending on the specific loan program:
- SBA 7(a) Loans: These loans have variable or fixed rates, with maximum rates set by the SBA based on loan size and term.
- SBA 504 Loans: The CDC portion offers fixed rates, while the bank portion may have fixed or variable rates.
- SBA Microloans: Typically carry fixed interest rates, determined by intermediary lenders.
Understanding the differences in interest rate structures across SBA loan types is crucial for selecting the loan that best aligns with your business's financial needs and repayment capabilities.
