Loan Amounts, Terms & Rates
The 7(a) program is governed by hard limits on size, term, and rate — set by the SBA, enforced on the lender, and worth knowing before you walk into a conversation about pricing.
Loan amount: up to $5 million
The hard cap on a single 7(a) loan is $5,000,000. The SBA's guarantee — which determines how much risk the lender keeps on its books — depends on the size:
| Loan size | Maximum guarantee |
|---|---|
| ≤ $150,000 | 85% |
| $150,001 – $5,000,000 | 75% |
This is why small-dollar lending has exploded — the higher guarantee makes those loans dramatically more attractive to lenders. SBA 7(a) loans under $150K grew 228% from FY2021 to FY2025, and they now make up over half of all approvals.
Term: matched to use of funds
The SBA caps the term based on what the money is for:
| Use of funds | Maximum term |
|---|---|
| Real estate (purchase, refinance, construction) | 25 years |
| Equipment | The lesser of useful life or 10 years |
| Working capital | 10 years (often shorter) |
| Business acquisitions | 10 years (no balloon) |
| Debt refinancing | Generally matches refinanced debt's remaining term, capped at 10 (or 25 if real estate) |
A loan that finances a mix (say, real estate + working capital) gets the weighted average of those terms — so a $1M loan that's 70% real estate and 30% working capital won't get the full 25-year amortization.
Rate structure: capped, not free
This is the part most borrowers misunderstand. The SBA does not set the rate. It sets a maximum spread above an approved base rate. Lenders can quote anything up to that ceiling.
Currently approved base rates (May 2026):
- WSJ Prime: 6.75%
- Optional Peg Rate: 4.50%
- 30-Day SOFR + 1.97%: ~3.66% (added March 2026)
- 5-Year Treasury: ~4.02% (added March 2026)
- 10-Year Treasury: ~4.40% (added March 2026)
Most lenders price off WSJ Prime. The maximum spread depends on loan size:
The smaller the loan, the higher the rate
WSJ Prime base (6.75%, dark) plus the maximum allowable spread (purple). Smaller loans cost more — a known dynamic of the program.
SourceSBA SOP 50 10 8 maximum spread schedule, May 2026.
The cap protects you from price gouging, but lenders can — and do — quote below the cap on stronger files. Bank of America's average FY2025 rate was 7.60%; the program-wide average across the top 20 lenders was closer to 10.5%.
What you can actually negotiate
The cap is fixed. Plenty else isn't:
- Spread within the cap. A 0.50% lower spread on a $1M loan saves about $5,000/year. Worth shopping.
- Variable vs. fixed. Higher upfront rate vs. rate stability. Depends on your view of the next 5 years.
- Whether fees roll into the loan. Most do, but you'll pay interest on them for the term.
- Prepayment terms. No prepayment penalty for loans with terms under 15 years. Loans 15+ years have a declining 3-year prepay (5% / 3% / 1%).
- Personal-guarantee carve-outs. Required from any 20%+ owner — but you can negotiate scope (e.g., limited to a percentage, or burning off after a milestone) at the margin.
Why the small-dollar boom matters
The fastest-growing segment of the program is loans under $150K. Faster underwriting (often via FICO SBSS scoring), 85% guarantee, lower documentation burden — and a real path to capital for the smallest borrowers, who got crowded out for years.
| Bracket | Share of FY2025 loans |
|---|---|
| Under $150K | >50% |
| Under $500K | >80% |
| $1M+ | <16% |
The mix has shifted dramatically. If your loan is $250K, you're squarely in the program's sweet spot.
Last verified: May 9, 2026. Rates and base-rate options per SOP 50 10 8 and the SBA's March 2026 update.