Glossary · The loan itself
Term SOFR
In short
Term SOFR is a benchmark interest rate used for variable-rate SBA loans. It reflects the cost of borrowing cash overnight, providing a forward-looking rate for your loan's interest adjustments.
What it means in a deal
For an SBA 7(a) loan, your variable interest rate will likely be tied to Term SOFR plus a lender's spread. This means your monthly payments can change as Term SOFR fluctuates. Understand how often your rate resets, as this directly impacts your cash flow after debt service.
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 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?
- Can an SBA 7(a) loan finance tenant improvements on leased property if the lease term matches the loan term?
- If I am buying a business that leases its property, can I get a longer loan term if the lease is long-term?
- What is the typical repayment term for working capital only?
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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