Glossary · The loan itself
SOFR
In short
SOFR, or Secured Overnight Financing Rate, is another benchmark interest rate for variable-rate loans, replacing LIBOR. As a buyer, your SBA 7(a) loan might be tied to Term SOFR, affecting your interest payments.
What it means in a deal
The SBA now allows 7(a) loan rates to be indexed to Term SOFR as an alternative to the Prime Rate. Like Prime, your loan's interest rate will be Term SOFR plus a spread. Understand which index your lender uses and its historical volatility when evaluating your loan terms and future cash flow impact.
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 SOFR
- What are the specific requirements for an alternative base rate, like SOFR, to be used for a 7(a) variable rate loan?
- If a lender wishes to use SOFR as a base rate for a variable rate 7(a) loan, what specific documentation is required?
- Can a lender change the base rate option (e.g., from Prime to SOFR) for a variable rate 7(a) loan after closing?
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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