Glossary · The loan itself
Allowable Spread
In short
The maximum interest rate margin an SBA lender can charge above the prime rate or SOFR. It's regulated by the SBA to ensure fair pricing for borrowers.
What it means in a deal
The SBA sets maximum allowable spreads that lenders can charge over the base rate (like WSJ Prime or Term SOFR). For a 7(a) loan, this spread depends on the loan size and term. Ensure your lender's proposed interest rate does not exceed the SBA's maximum allowable spread, as this is a key compliance point for your loan terms.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Allowable Spread
- What are the maximum allowable interest rates for variable rate 7(a) loans, including the permissible spread?
- What is the difference between the base rate and the spread on an SBA 7(a) loan?
- How do lenders determine the maximum allowable interest rate for a variable rate 7(a) loan?
- What is the maximum allowable loan term for a 7(a) loan used solely for working capital?
- What are the current allowable alternative base rate options for variable rate 7(a) loans, besides Prime Rate?
- What is the maximum interest rate spread a lender can add over the base rate for an SBA 7(a) loan?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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