The SBA 7(a) loan is a 10 year term with a monthly repayment. It is an amortizing product, meaning that you are paying the interest on the outstanding principal of the loan (similar to a car or mortgage). Because of this, if you pay the loan off early you save on all remaining interest and there is no prepayment penalty.
The interest rate of the loan is a variable rate based on what the Federal Reserve sets prime at., plus a range of 2.25% to 7.75%. The prime rate is a market rate that goes up or down based on how the strength of the U.S economy., The Wall Street Journal rate is source most lenders refer to for prime. Banks use the prime rate as a benchmark for setting rates on consumer and commercial loans. As of March 16, 2020, the prime rate is 3.25%.
Therefore, this means that maximum SBA loan rates for the 7(a) program currently range from 6% to 8%. Nevertheless, to participate in the SBA 7(a) loan program, your SBA lender can’t currently charge more than 8%.
The SBA 7(a) program we offer is currently at 6% interest.