Current SBA Loan Rates, January 2022

The affordability of Small Business Administration (SBA) loans attracts many small businesses that may not otherwise be able to obtain affordable financing. Whether you are considering SBA 7(a) loans, Express loans, Microloans, or CDC/504 loans, the SBA loan rates you receive will likely be more affordable than many other financing options.

SBA loan rates as of January 1, 2022, are:

  • SBA 7(a) loan rates: 5.5% to 8%
  • SBA Express loan rates: 7.75% to 9.75%
  • CDC portion of CDC/504 loan rates: 2.793% to 3.023%
  • SBA Microloan rates: 6% to 9%
  • SBA Economic Injury Disaster Loan (EIDL) rates: 2.75% to 3.75%

If you’re planning to apply for an SBA loan, consider using South End Capital. South End Capital can approve SBA loans for business owners with credit scores as low as 650, with funding of your approved loan in a matter of weeks. Contacting a loan officer is an easy process that requires only a few pieces of information.

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SBA (7A) Loan Interest Rates & Explanation

The SBA sets the maximum interest rates that banks can charge on SBA 7(a) loans. The current maximum interest rate ranges from 5.5% to 8%, depending on the size of the loan and the amount being borrowed.

The maximum interest rates on SBA 7(a) loans are based on market interest rates. As market interest rates change, so will the maximum allowable interest rates on these loans.

Maximum SBA 7(a) Loan Rates for January 2022

Our free SBA loan calculator can help you estimate your monthly payment on an SBA 7(a) loan based on these interest rates and the amount you need to borrow.

How SBA 7(a) Loan Rates Are Determined

The maximum interest rate on SBA 7(a) loans is based on three factors:

  1. A base rate (one of the following publicly available interest rate measures): Prime rate, LIBOR (one month) plus 3.0%, or the SBA’s price/earnings to growth (PEG) ratio.
  2. The loan term: Loans of greater than seven years will be priced higher than those under seven years.
  3. The loan size: Loan sizes are categorized as less than $25,000, between $25,000 and $50,000, and over $50,000. For instance, loans of $30,000 and $40,000 will fall in the same category.

Fixed vs Variable SBA Loan Interest Rates

SBA 7(a) loans can have a fixed or variable interest rate. With a fixed-rate loan, the interest rate remains constant throughout the life of the loan. With a variable-rate loan, the interest rate can change (also referred to as a reset) at quarterly or monthly intervals.

The interest rate for variable-rate SBA 7(a) loans is reset based on one of three publicly available market interest rate numbers plus a fixed percentage. The interest rate must always be at or below the maximum interest rate set by the SBA. For smaller SBA loans—those under $500,000—banks tend to offer only variable rate loans, with interest rates at or close to the maximum allowable by the SBA.

Base Rate & Interest Rate Resets

As we covered, banks can choose one of three market interest rate measures as their base rate—the prime rate, LIBOR plus 3.0%, or the SBA PEG rate. While there are minor differences between these rates, they tend to track very closely. The prime rate is the one that’s most commonly used.

Rates as of January 1, 2022:

SBA Express Loan Rates

SBA Express loans are a subset of the SBA 7(a) loan program. Express loans offer a faster approval process than a standard SBA 7(a) loan. However, this convenience is offset by a higher interest rate. Express loans have a maximum of $350,000.

The maximum interest rates for SBA Express loans are:

  • Loans up to $50,000 (Prime + 6.5%): 9.75%
  • Loans over $50,000 (Prime + 4.5%): 7.75%

SBA Express loans carry a higher interest rate for similar size amounts and terms than the standard SBA 7(a) loan. An experienced SBA Express loan provider, such as SmartBiz, can provide funding in as little as 30 days.

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SBA Loan Rates on Real CDC/504 Loans

The SBA sets the maximum interest rates that banks can charge on Community Development Company (CDC)/504 loans. The maximum interest rates on CDC/504 loans are tied to market interest rates and based on the amount being borrowed.

A CDC/504 loan is composed of two loans:

  1. Bank loan: A loan from a financial institution (bank) for typically 50% of the price of the property, equipment, and building upgrades.
  2. CDC loan: A loan from a nonprofit organization, a certified development company (CDC), for 40% of the price.

The remaining 10% is a down payment from the borrower. The SBA doesn’t set the interest rate on the bank portion of the loan; however, the interest rate on these loans tends to be very low, capped at 10%. Since the loan is backed by real estate, there’s a lower risk to the bank of not getting back the money it lends. This lower risk is reflected in a lower interest rate.

Current CDC Loan Interest Rates

  • 10-year Term: 2.793%
  • 20-year Term: 2.875%
  • 25-year Term: 3.023%

Unlike the SBA 7(a) loan, which may have a variable rate, the loan rates for the CDC portion of an SBA 504 loan are fixed for the life of the loan and won’t change. The portion of the loan provided by the bank, credit union, or non-bank lender doesn’t need to be fixed. It may have a variable rate or balloon payment.

SBA Loan Interest Rates on SBA Microloans

Loan amounts for SBA microloans cannot exceed $50,000, and repayment periods cannot extend beyond six years, as the SBA sets those thresholds. Interest rates for microloans generally range from 6% to 9%. However, the exact rates and terms available for SBA microloans vary by lender.

SBA microloans are offered by intermediaries referred to as SBA microlenders. These SBA microlenders are often nonprofit organizations with expertise in small business lending and technical assistance. The SBA maintains a list of all current SBA microlenders, organized by state.

Economic Injury Disaster Loans (EIDLs)

These SBA disaster loans are available to businesses that have suffered economic loss through a natural or economic disaster. This program requires a disaster declaration from the federal government for a business to apply.

EIDL Terms

  • Loan amount: Up to $2 million or 24 months of economic activity
  • Repayment term: Up to 30 years
  • Interest rate: 3.75% for for-profit businesses, 2.75% for nonprofit businesses
  • Deferral of payment: Up to 18 months

EIDL Qualifications

The qualification requirements for an EIDL include:

  • Business type: Businesses, agricultural cooperatives, and nonprofits
  • Economic injury: Business has faced economic injury as a direct result of the disaster and is unable to pay ordinary operating expenses
  • Business size: No more than 500 employees; sole proprietors or independent contractors are eligible
  • Credit: At least a FICO score of 570 for loans up to $500,000—for loans over $500,000, a minimum FICO score of 625 is required
  • Business revenue: There are no revenue requirements and qualification doesn’t require tax return or tax return transcript for approval

If your business meets these eligibility requirements, you can apply for an EIDL directly through the SBA’s Disaster Loan Portal.

Bottom Line

With the variety of loan programs offered by the SBA, there are many opportunities for small businesses to find a loan that meets their needs. Affordable SBA loan rates, coupled with favorable repayment terms, make them an attractive financing option for small businesses.

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