Glossary · The loan itself
SOFR-based rate
In short
An interest rate tied to the Secured Overnight Financing Rate (SOFR), which replaced LIBOR as a key benchmark for variable-rate loans. Most new variable-rate SBA loans use a SOFR-based index.
What it means in a deal
Your variable-rate SBA 7(a) loan will likely use a SOFR-based index, such as Term SOFR, plus a spread. This rate adjusts periodically, so your monthly payment can change. Understand the specific SOFR index and spread your lender uses, and how often it resets.
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-based rate
- 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?
- What is the interest rate on an SBA 7(a) loan based on?
- 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?
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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