Glossary · The loan itself
Optional peg rate
In short
This refers to the base index rate your loan's variable interest rate is tied to, which is typically the WSJ Prime Rate or Term SOFR. Your lender may offer a choice between these.
What it means in a deal
Most SBA 7(a) loans have variable interest rates. The "peg rate" is the underlying index that fluctuates, to which your lender adds a "spread." Understand which peg rate you're choosing and how it has historically moved to anticipate your future interest payments, especially for long-term loans.
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 Optional peg rate
- What is the difference between Prime Rate and the SBA optional peg rate for 7(a) loans?
- What alternative base rates are available for variable-rate 7(a) loans besides the Wall Street Journal Prime rate?
- What is the 'Prime Rate' when talking about SBA 7(a) loan rates?
- What specific alternative base rates are permissible for variable rate 7(a) loans?
- 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?
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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