Glossary · The loan itself
Maximum Allowable Cap
In short
The highest interest rate a lender can charge on an SBA loan, determined by SBA regulations. Buyer cares because this protects you from excessive interest rates and helps you estimate your maximum loan cost.
What it means in a deal
The SBA sets a maximum interest rate lenders can charge, which is the Wall Street Journal Prime Rate (or Term SOFR) plus a maximum "Spread." This cap varies based on loan size and term. Always ensure your proposed interest rate is within these statutory limits, which your lender should clearly disclose.
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 Maximum Allowable Cap
- What is the maximum allowable loan term for a 7(a) loan used solely for working capital?
- How do lenders determine the maximum allowable interest rate for a variable rate 7(a) loan?
- What are the maximum allowable interest rates for variable rate 7(a) loans, including the permissible spread?
- How does a lender determine the maximum allowable interest rate for a variable-rate 7(a) loan tied to the WSJ Prime?
- How is the interest rate cap determined for a variable rate 7(a) loan?
- What are the current allowable alternative base rate options for variable rate 7(a) loans, besides Prime Rate?
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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