Glossary · The loan itself
Effective interest rate(Annual Percentage Rate (APR))
In short
This is the actual annual interest rate paid on a loan or investment, taking into account compounding and all fees. It gives you the true cost of borrowing.
What it means in a deal
Your SBA 7(a) loan will have a stated interest rate, but the effective rate includes the SBA guaranty fee, ongoing servicing fees, and any lender closing costs. Compare the effective interest rate across different lenders to understand the total cost of each loan option.
Related terms
Common questions about Effective interest rate
- What happens to the interest rate on an SBA 7(a) loan if general market interest rates go down significantly?
- What is the Wall Street Journal Prime Rate's role in SBA 7(a) loan interest rates?
- What are the maximum allowable interest rates for variable rate 7(a) loans, including the permissible spread?
- What is the difference between a fixed interest rate and a variable interest rate on an SBA 7(a) loan?
- How is the interest rate cap determined for a variable rate 7(a) loan?
- Are SBA 7(a) loan interest rates typically fixed or variable, and what base rate index is commonly used?
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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