Prime is 7.00%. Here is what that does to your SBA payment.
By the AceTheSBA team
The Wall Street Journal Prime rate is 7.00% today. Most SBA 7(a) loans carry a variable rate tied to Prime, so every time Prime moves, so does the maximum a lender can charge you, and so does your payment.
The rule
SBA caps what a lender can charge on a variable 7(a) loan at Prime plus a spread that depends on the loan size. At today’s Prime:
- $50,000 or less: Prime + 6.5% = 13.50% maximum
- $50,001 to $250,000: Prime + 6.0% = 13.00% maximum
- $250,001 to $350,000: Prime + 4.5% = 11.50% maximum
- Over $350,000: Prime + 3.0% = 10.00% maximum
These are ceilings, not prices. Lenders can and do quote less.
What a quarter point costs
A bakery borrowing $325,000 over 10 years at the maximum rate of 11.50% pays $4,569.35 a month. If Prime rises by a quarter point, the same loan costs $4,615.96: $46.61 more a month, or $559.32 a year, for the same money. On a variable-rate loan, that change applies from the next rate adjustment.
The lender’s view
Lenders test your cash flow against the payment at the rate they will actually charge. A higher rate means a higher payment, and a higher payment means a lower debt service coverage ratio. A business that clears the minimum comfortably at one rate may be close to the line a few rate moves later.
Your move this week
Where do you stand?
Your payment is only half the question. The other half is whether your cash flow covers it the way a lender measures it. The SBA Readiness Report scores your repayment capacity alongside documentation, credit and eligibility, for $19.99.
This week’s tool
Compare lenders side by side, with 25 questions to ask before you choose one.
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