SBA Loans Interest Rate

The primary reason why business owners fight and strive for them to be able to get approved of a loan from the Small Business Administration (SBA) is because of the low interest rates. Some business owners accept the fact that it can take anywhere between 3 to 5 months for their funds to be released just for them to pay low interest rates per month.

But is it really worth it? As a business owner, are you willing to sacrifice weeks and even months of injured operations just for you to receive the funds from the SBA? How good are the interest rates of SBA loans?

Types of SBA Loans

Now the reason why people love taking SBA loans is the fact that they provide the best and the lowest interest rates. However, these rates are different and they vary between each loan type the SBA offers. The following are the type  of loans that the SBA provides:

• SBA 7(a) Loan
• SBA CAPLines
• SBA Export Loans
• SBA CDC Loans or the 504 Loan Program
• SBA Disaster Loan
• SBA Micro Loans

Those are the different types of SBA loans. They carry a specific type of help they provide; for instance, the SBA Export Loans are the loans that help and support businesses that have plans of going international.

The SBA Disaster Loan, on the other hand, is the type of loan that would assist businesses and even homeowners who experienced hardships with their property because of a natural disaster.

So basically, the different types of loans have their differences as well – now, let’s figure out the finality of the interest rates of these SBA loans.

SBA Loans Interest Rates

For the SBA 7(a) Loan, there are categories: loans up to $25K, from $25K up to $50K, and $50K and more. In addition to that, the rates are also different depending on the term rate.

For $25K and below loans:

• Less than 7 years – The base rate plus 4.25%
• More than 7 years – The base rate plus 4.75%

For $25K to $50K

• Less than 7 years – The base rate plus 3.25%
• More than 7 years – The base rate plus 3.75%

For $50K and above

• Less than 7 years – Base rate plus 2.25%
• More than 7 years – Base rate plus 2.75%

For the SBA CDC or the 504 Loan Program, the interest rates are 3.40% up to 3.65% with a repayment term of 10 and 20 years respectively. In addition to that, there’s a collateral requirement.

For the SBA CAPLines Program, the interest is somewhere at 5 to 10% and the repayment terms are 10 years for working capital, seasonal, and contract CAPLines; and 5 years for the CAPLines in the builder industry.

The SBA Export Loans, in this case, the interest rate is at 6 to 10% for the working capital; 9.75% to 11.75% for the Export Express; an 7.50% to 10% for international. The repayment terms are 12 months to 3 years, 10 to 25 years, and up to 10 to 25 years, respectively.

The SBA disaster loan interest rates play at 4 to 8 percent with repayment terms of up to 30 years. This has the lowest because it’s some kind of goodwill that the SBA provides people who have severely been affected by disasters.

Lastly, the SBA Microloans have interest rates that range from 8 to 14 percent and the typical repayment term is up to six (6) years.

The interest rates offered by SBA loans are definitely low. In fact, they could be the best out in the market. The problem is with the amount they approve – they say that it can go high as $5 million but that’s only for the best candidates. In addition to that, the funds are also released slowly compared to other lenders.