Glossary · The loan itself
Permissible Spread
In short
This is the maximum interest rate a lender can charge on an SBA 7(a) loan, set by the SBA as a margin above a base rate. Buyers care because it directly impacts your monthly loan payments and total cost of borrowing.
What it means in a deal
The SBA defines maximum spreads (e.g., 2.25% to 3.75% over Prime/SOFR, depending on loan size and term). Lenders will price your loan within this range. Negotiate for the lowest spread possible, as even small differences add up over a long amortization period.
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 Permissible Spread
- What are the maximum allowable interest rates for variable rate 7(a) loans, including the permissible spread?
- What specific alternative base rates are permissible for variable rate 7(a) loans?
- What is the difference between the base rate and the spread on an SBA 7(a) loan?
- What is the maximum interest rate spread a lender can add over the base rate for an SBA 7(a) loan?
- What are the permissible alternative base rate options for variable-rate 7(a) loans besides the Wall Street Journal Prime?
- What specific documentation is required to formally transition an authorized 7(a) loan from one permissible base rate to another?
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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