Answer
What is the average interest rate on a small business loan?
The median rate actually written on SBA 7(a) loans, what drives the spread, and what the rest of the market charges.
The median interest rate on recently approved SBA 7(a) loans is 10.25%. Bank term loans commonly run 9% to 14%, online lenders 20% to 60%, and merchant cash advances 40% to 350%+ once converted to an annual rate. The prime rate is 7.00%.
What SBA borrowers are actually paying
Figures below come from SBA 7(a) loan-level FOIA data released 2026-06-30, covering 214,102 7(a) loans approved fiscal years 2023 to 2026, using data released June 2026. Unlike advertised ranges, this is the rate written on the note.
| Measure | Figure |
|---|---|
| Median initial rate, SBA 7(a) | 10.25% |
| Median term | 10 years |
| Median loan amount | $150,000 |
| Prime rate (November 2026) | 7.00% |
| Implied median spread over prime | 3.25 points |
That median spread is the useful number. The SBA permits up to prime plus 3.00 to 6.50 points depending on loan size, so the typical borrower is landing meaningfully below the legal ceiling — which tells you the caps are not a price list and there is room to negotiate.
Why your quote differs from the median
- Loan size. The SBA spread cap narrows as the loan grows, so small loans price higher by design. See the rates page for the tiers.
- Credit. The difference between a 660 and a 740 file is typically one to three points.
- Time in business. Under two years, expect the top of any range.
- Collateral. Real-estate-secured lending prices well below unsecured lending.
- Industry. Restricted or loss-heavy sectors price higher when they price at all.
- Fixed vs. variable. Fixed-rate SBA loans carry a different, higher maximum.
The whole market, in order
| Product | Typical range |
|---|---|
| SBA 504 (CDC portion) | 6.0% - 7.5% effective, fixed |
| Home equity line | 7.5% - 12.0% APR |
| SBA microloan | 8.0% - 13.0% APR |
| SBA 7(a) | 10.0% - 14.0% APR |
| Bank term loan | 9% to 14% APR |
| Equipment financing | 7.0% - 30.0% APR |
| Business credit cards | 18.0% - 29.0% APR |
| Online term loan | 20% to 45% APR |
| Invoice factoring | 1% - 5% per 30 days |
| Merchant cash advance | 40% to 350%+ effective |
How to get a better rate than the median
- Get a second written offer. Nothing else moves pricing as reliably.
- Ask for a longer term instead of a lower rate if cash flow is the constraint. It usually helps more.
- Offer collateral you were not asked for, if you are comfortable with it.
- Fix your utilization first. Paying revolving balances below 10% can move your score enough to change the tier you price in.
- Ask whether the lender is at their floor or their ceiling. On a strong file at a large loan size, quoting the SBA cap is an opening position, not a price.
Questions people actually ask
Is 10.25% a good rate for a business loan?
It is the median for an SBA 7(a) right now, so it is a reasonable benchmark for an established business with decent credit. If you are being quoted materially above it on a large, well-secured loan, get a second opinion. If you are a startup or have thin credit, pricing above the median is normal.
Are SBA loan rates fixed or variable?
Most 7(a) loans are variable and reprice with the base rate, usually quarterly. Fixed-rate 7(a) loans exist under a separate maximum. The CDC portion of a 504 is always fixed for the full term, which is that program's defining feature.
Will my rate go down if rates fall?
On a variable-rate loan, yes, at the next reset. On a fixed-rate loan, no -- you would have to refinance, and you should check the prepayment terms before assuming that is worthwhile.