The Prime Rate increased from 6.75% to 7.00% effective September 17, 2026. As a result, it is important for U.S. Small Business Administration (“SBA”) lenders to understand and utilize the appropriate Prime Rate when determining the initial interest rate for upcoming SBA 7(a) loan originations which utilize the Prime Rate as the base rate.
How should SBA lenders apply this information?
The initial interest rate for a variable interest rate loan is calculated, and based upon, the Prime Rate in effect on the first business day of the month in which a complete loan application is received by SBA, regardless of the Prime Rate in effect on the date of the SBA 7(a) loan approval or closing. SBA has clarified that the date the “complete loan application is received by SBA” is the date the loan is approved and assigned a loan number (for both delegated and non-delegated processing).
The Prime Rate increase also applies to fixed rate SBA loans. As set forth in SOP 50 10 8 with Technical Updates, the maximum allowable fixed interest rate will be the Prime Rate in effect on the first business day of the month in which a complete loan application is received by SBA, plus an allowable spread over Prime, as set forth in the most recent Federal Register Notice.
For the applicable provisions see page 124 for Standard 7(a) Loans and page 161 for 7(a) Small and Express Loans in SOP 50 10 8 with Technical Updates. (Click here to access the SOP on the SBA website.)
Practical Example #1:
- Prime Rate is 6.75% as of September 1, 2026 (first business day of the month)
- Prime Rate increases to 7.00% effective September 17, 2026
- SBA assigns a loan number on September 20, 2026
- Loan anticipated to close on October 10, 2026
- Lender should use the Prime Rate of 6.75% in effect on September 1, 2026, in determining the initial interest rate
Practical Example #2:
- Prime Rate is 7.00% effective September 17, 2026
- SBA receives a complete loan application on October 20, 2026
- Loan anticipated to close on November 15, 2026
- Lender should use the Prime Rate in effect on the first business day of October, 2026, in determining the initial interest rate.
If your lending institution has questions regarding SBA interest rate requirements, or other SBA lending matters, please contact us at SBAQuestions@JellumLaw.com.