Glossary · The loan itself
Maximum allowable spread
In short
The highest percentage a lender can add to the base rate (like Prime or SOFR) when calculating your SBA loan's interest rate. This ensures lenders don't overcharge borrowers beyond SBA limits.
What it means in a deal
The SBA sets caps on the spread lenders can charge, based on the loan amount and maturity. For example, a loan over $50,000 with a term of 7 years or more has a maximum spread. Negotiate with your lender to get a spread below the maximum, as this directly impacts your ongoing interest costs and debt service.
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 spread
- What are the maximum allowable interest rates for variable rate 7(a) loans, including the permissible spread?
- 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 is the maximum interest rate spread a lender can add over the base rate for an SBA 7(a) loan?
- How does a lender determine the maximum allowable interest rate for a variable-rate 7(a) loan tied to the WSJ Prime?
- What is the difference between the base rate and the spread on 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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