Every SBA rate page tells you the ceiling. Few tell you the choice underneath it: whether the rate floats with prime or stays put, how the reset works, and what each option has actually cost borrowers. The SBA’s public loan record carries the initial rate and the fixed-or-variable flag for 919,627 7(a) loans funded from fiscal year 2010 through March 31, 2026. This guide uses all of them.
Most 7(a) loans float
In FY2025, 87.6% of 7(a) loans carried a variable rate. Across all years since FY2010 the share is 81.1%, and it has never dropped below about three-quarters: the low point was FY2014 at 75.8%, and the share has risen every year since FY2020. Fixed-rate 7(a) loans are a real but shrinking minority.
The 504 program is the mirror image. The CDC/SBA debenture portion, roughly 40% of a typical project, is funded by a bond sold to investors and carries a fixed rate for its full 10-, 20-, or 25-year term. The bank’s first-lien half of a 504 project is negotiated separately and can be either. The current debenture rate is on the SBA 504 loan rates page.
How a variable 7(a) rate works
13 CFR 120.214 sets the mechanics, and they are stricter than most commercial loans:
- Base rate. Prime as printed in a national financial newspaper on the first business day of the month, the SBA’s optional peg rate (published quarterly in the Federal Register), or an alternative base rate the SBA has approved by notice.
- Spread. The lender’s margin is capped by loan size: base plus 6.5 points at $50,000 or less, plus 6.0 points up to $250,000, plus 4.5 points up to $350,000, and plus 3.0 points above $350,000. The current SBA loan rates page converts those into today’s ceilings.
- Frequency. The first change may occur on the first calendar day of the month after the initial disbursement, using the base rate in effect on the first business day of that month. After that, changes may occur no more often than monthly. Lenders may choose a quarterly schedule, but they cannot reset more often than monthly.
- Size of each move. The rate moves by exactly the movement in the base rate. The spread is fixed for the life of the loan, so a variable 7(a) loan is really a fixed spread over a floating index.
- Payment. Amortization may be recomputed as the rate moves, so the payment can change. Balloon payments are prohibited.
How a fixed 7(a) rate works
A lender may charge a reasonable fixed rate under 13 CFR 120.213, subject to a maximum the SBA publishes periodically in the Federal Register. The rate is set at closing and does not change. There is no rule forcing a lender to offer one; many active SBA lenders sell the guaranteed portion of their loans in the secondary market, where variable-rate paper is the standard product, and that shapes what they quote.
What each group actually paid
The record answers the question borrowers actually ask: which one costs more? At signing, fixed has been cheaper or equal in every fiscal year since 2010.
| Fiscal year | Loans with a rate | Variable share | Median fixed | Median variable |
|---|---|---|---|---|
| 2021 | 51,821 | 81.1% | 4.95% | 5.5% |
| 2023 | 57,362 | 85.2% | 8% | 10.5% |
| 2024 | 70,241 | 86.6% | 8.75% | 11.25% |
| 2025 | 78,072 | 87.6% | 8.25% | 10.25% |
| 2026 (through March 31) | 26,465 | 87.6% | 8.08% | 9.75% |
The gap widens when rates are high. In FY2021, with prime at its floor, fixed and variable medians were 55 basis points apart. In FY2024 the gap was 250 basis points.
The same pattern holds by loan size. Among FY2025 loans:
| Loan size | Loans | Variable share | Median fixed | Median variable |
|---|---|---|---|---|
| $50,000 or less | 18,722 | 86.6% | 9.49% | 11% |
| $50,001 to $250,000 | 28,342 | 90.5% | 8.5% | 10.5% |
| $250,001 to $350,000 | 6,663 | 89.2% | 8% | 10.25% |
| More than $350,000 | 24,345 | 84.7% | 7.5% | 9.75% |
Why fixed looks cheaper, and why that is not the whole story
Read the tables carefully before concluding that fixed is the better deal. These are initial note rates on two different populations of loans, not two quotes to the same borrower:
- Selection. Lenders tend to reserve fixed pricing for larger loans, real estate, and stronger credits. The size table shows fixed-rate loans above $350,000 at a 7.5% median; that borrower would likely also have been quoted a below-median variable rate.
- Timing. A variable rate recorded in FY2024, when prime was high, has already reset downward as prime fell; the record stores the rate at approval, not the rate today. A fixed rate from the same year is still being paid.
- Direction risk runs both ways. A borrower who fixed in FY2021 at 4.95% has been paid handsomely for it. A borrower who fixed in FY2024 at 8.75% still sits below the FY2026 variable median of 9.75%, but a variable-rate borrower from FY2024 has already reset down from 11.25% as prime fell, and if prime keeps falling the fixed borrower’s advantage shrinks and eventually reverses.
What the record does establish is the size of the premium lenders charge for floating exposure they pass to you: two to two-and-a-half points in the last three fiscal years. That is the number to weigh against your own view of where prime goes.
The prepayment interplay
A fixed rate is only valuable if you keep it. On a 7(a) loan with a maturity of 15 years or more, prepaying more than 25% of the highest outstanding balance in any of the first three years triggers the SBA’s subsidy recoupment fee under 13 CFR 120.223: 5% of the prepaid amount in year one, 3% in year two, 1% in year three. That applies to fixed and variable loans alike. On shorter terms, which cover most working-capital and equipment loans, there is no SBA prepayment penalty, so a variable-rate borrower who wants to refinance into a fixed rate later can. The details are in SBA loan prepayment penalties.
How to decide
- Ask for both quotes. If a lender offers only variable, ask what its fixed rate would be and whether it sells its loans. Compare the spread, not just the headline number, because the spread is what you keep for 10 to 25 years.
- Match the rate to the term. A 25-year real estate loan carries a quarter century of rate risk; the 504 program exists to remove it on the SBA portion, and a 504 loan is often the better structure for that purchase.
- Model the reset. The SBA loan calculator prices a payment at any rate; run it at your quoted variable rate and again two points higher to see the cash-flow cushion you need.
- Check the lender’s pricing, not the program’s. The same loan is priced differently by different lenders; average SBA loan interest rates ranks active lenders by the median rate on their recent loans.
Rate rules follow the current SBA regulations and SOP; the figures above are initial note rates at approval, not APRs, and the SBA guaranty fee is separate. Confirm current terms with a participating lender.