Glossary · The loan itself
Spread
In short
What the lender adds on top of Prime. The SBA caps it — 3% for loans over $350K. Strong borrowers negotiate under the cap.
What it means in a deal
The spread is the lender's margin — it covers their cost of capital, risk, and profit. For loans over $350K the SBA caps the spread at 3% over Prime; for smaller loans the cap is slightly higher. Strong deals with excellent DSCR, clean books, and an experienced buyer can sometimes negotiate under the cap, especially with a PLP lender who wants the volume. Even a half-point difference on a $1M loan is meaningful over a ten-year term.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
7(a) Loan Program — Terms, Conditions, and Eligibility
U.S. Small Business Administration · Official SBA source
Last checked 2026-06-16. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Spread
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 2026-06-16 · 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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