Glossary · The loan itself
Term Secured Overnight Financing Rate(Term SOFR)
In short
This is a benchmark interest rate based on the cost of borrowing cash overnight, used for variable rate loans. It has replaced LIBOR as a common index for SBA loan interest rates.
What it means in a deal
Many SBA 7(a) loans use Term SOFR as the base rate for their variable interest rates, to which a lender's spread is added. Understand how Term SOFR fluctuations will impact your monthly loan payments. Ensure your financial projections account for potential increases in this variable rate.
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 Term Secured Overnight Financing Rate
- Can a lender unilaterally increase the interest rate on a variable rate 7(a) loan during its term?
- Can a 7(a) lender unilaterally increase the interest rate on a variable rate loan during its term?
- Can a lender modify a 7(a) loan's term or interest rate in E-Tran after initial authorization?
- 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?
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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