Layer one: the interest rate
SBA does not set the rate. It sets a maximum, and the lender prices at or below it. The base is the prime rate, which stands at 6.75 percent in 2026. Maximum spreads over that base depend on loan size.
Variable rate caps in 2026
- Loans up to $50,000: 13.25 percent
- Above $50,000 up to $250,000: 12.75 percent
- Above $250,000 up to $350,000: 11.25 percent
- Above $350,000: 9.75 percent
Fixed rate caps in 2026
- Loans up to $25,000: 14.75 percent
- Above $25,000 up to $250,000: stepping down through the low to mid 13s
- Above $250,000: 11.75 percent
Small loans carry a higher cap because the fixed cost of underwriting a $40,000 loan is similar to that of a $400,000 loan. Note the effect at the boundaries: a $355,000 request can price materially cheaper than a $345,000 request. If you are close to a threshold, ask the lender to model both.
Layer two: the guarantee fee
SBA charges an upfront guarantee fee, calculated on the guaranteed portion of the loan rather than the full amount. Most loans above $150,000 are guaranteed at 75 percent, and smaller loans are commonly guaranteed at 85 percent.
- Maturity of 12 months or less: about 0.25 percent
- Over 12 months, up to $150,000: about 2 percent
- Above $150,000 up to $700,000: about 3 percent
- Above $700,000: 3.5 percent, rising to a blended 3.5 to 3.75 percent on the largest loans
The fee is waived or reduced on some categories, including certain loans to small manufacturers and some veteran owned business programmes. Waivers are set annually in SBA notices, so confirm the position for the fiscal year in which you close rather than relying on last year's figure.
On a $500,000 ten year loan, the guaranteed portion is $375,000 and a 3 percent fee is $11,250. Lenders usually allow the fee to be financed into the loan, which spreads it but adds interest on top.
Layer three: closing costs
Closing costs are charged by third parties and by the lender, not by SBA. On a typical commercial deal they run 1 to 3 percent of the loan.
- Packaging fee: $2,000 to $5,000, capped for smaller loans
- Business appraisal or valuation: $2,000 to $5,000 where goodwill is involved
- Real estate appraisal: $3,000 to $7,000
- Environmental report: $1,500 for a records search, far more for a phase one or two
- Title, escrow and recording: varies by state
- Lender legal: $1,500 to $10,000 depending on structure
- UCC filings, lien searches and corporate records: a few hundred dollars
Putting the three layers together
A $500,000 loan over ten years at 10.5 percent has a monthly payment of about $6,747 and total interest of roughly $309,600. Add an $11,250 guarantee fee and around $9,000 of closing costs, and the total cost of the money is about $330,000 on top of the principal. At the 9.75 percent cap for a variable loan of this size the interest falls by roughly $22,000, which is why negotiating the spread is worth real effort.
Costs that appear later
- Prepayment penalties apply to loans with maturities of 15 years or more, at 5, 3 and 1 percent of the prepaid amount in years one to three when the prepayment exceeds a quarter of the balance.
- Variable rate loans reprice quarterly or monthly against prime. A one point move on a $500,000 balance changes the payment by roughly $250 a month.
- Annual servicing fees are charged to the lender and are sometimes reflected in pricing.
- Life insurance assignment and hazard insurance requirements carry ongoing premiums.
How to reduce what you pay
- Get quotes from three SBA preferred lenders. Spreads on the same file vary by more than a point.
- Ask whether a slightly larger loan crosses into a lower rate cap band.
- Compare financing the guarantee fee against paying it in cash if you have the reserves.
- Ask for the full itemised closing cost estimate in writing early, not at commitment.
- Match the term to the asset. A long term on short lived equipment increases total interest with no benefit.