Glossary · The loan itself
Secured Overnight Financing Rate(SOFR)
In short
SOFR is a new benchmark interest rate used for many variable-rate loans, replacing LIBOR. Like WSJ Prime, a "spread" is added to SOFR to determine your actual loan interest rate.
What it means in a deal
For SBA 7(a) loans, lenders are increasingly using Term SOFR as the base rate for variable interest loans. Be aware if your loan is tied to SOFR, as your payments will adjust quarterly or monthly based on its fluctuations. Factor potential rate increases into your cash flow projections.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Secured Overnight Financing Rate
- 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?
- Is a loan secured by personal assets eligible for the down payment?
- Can a seller note on full standby still be secured by business assets?
- What is the Wall Street Journal Prime Rate's role in SBA 7(a) loan interest rates?
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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