Glossary · The loan itself
Prime Rate
In short
The Prime Rate is a benchmark interest rate used by banks, often for variable-rate loans. For a buyer, this rate directly influences the interest payments on your SBA 7(a) loan, as your rate will be the Prime Rate plus a spread.
What it means in a deal
SBA 7(a) loans typically have variable interest rates tied to either the Prime Rate or Term SOFR. Your lender will quote your loan rate as Prime plus a fixed percentage, known as the spread. Keep an eye on the Wall Street Journal Prime Rate as it fluctuates, impacting your monthly debt service payments.
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 Prime Rate
- What is the 'Prime Rate' when talking about SBA 7(a) loan rates?
- What alternative base rates are available for variable-rate 7(a) loans besides the Wall Street Journal Prime rate?
- What is the Wall Street Journal Prime Rate's role in SBA 7(a) loan interest rates?
- What are the current alternative base rate options for variable rate 7(a) loans, besides Prime Rate?
- What is the difference between Prime Rate and an SBA 7(a) loan rate?
- What are the permitted alternative base rate options for variable-rate 7(a) loans beyond the 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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