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If you're thinking about financing a business or franchise with an SBA 7(a) loan, understanding how these loan rates are priced is absolutely critical. With interest rates fluctuating and banks tightening up, getting clarity on SBA loan terms, margins, and lender preferences can make or break your funding success.
In this post, we’ll break down how SBA 7(a) loan rates work, the impact of Wall Street Journal Prime, and why working with the right lender—especially if you're buying a franchise—matters more than chasing the lowest rate.
💡 How Are SBA 7(a) Loan Rates Determined?
SBA 7(a) loans are variable-rate loans based on the Wall Street Journal (WSJ) Prime Rate, plus a lender margin. As of 2024, Prime is sitting at 8.5%, which is double what it was just a few years ago (4.25%). That means SBA loans are more expensive today than they’ve been in years—but this also opens up strategy opportunities if you know what you’re doing.
The lender’s margin (also called the “spread”) typically ranges between:
- Prime + 2.0% to Prime + 2.75% for most borrowers
- Prime + 1% or better for high net worth borrowers with strong profiles
Example: If Prime is 8.5% and your margin is 2.5%, your SBA 7(a) rate would be 11%.
🔒 Fixed Rate vs. Variable SBA 7(a) Loans
While most SBA 7(a) loans are variable, some banks offer fixed-rate options—especially if the loan includes commercial real estate. However, fixed rates aren’t always your best bet in a high-rate environment.
According to Beau Eckstein, now is not an ideal time to lock in a fixed rate, as interest rates are expected to trend downward in the coming years. If you lock in a high fixed rate now, and Prime drops, you're stuck paying more while others refinance or enjoy lower rates.
🏢 Franchise SBA Financing: Not Just About the Rate
When financing a franchise startup, most borrowers are offered Prime + 2% to 2.75%. That’s standard unless your personal finances and business profile are top-tier.
But here’s the kicker: not all lenders understand the nuances of franchise lending.
You might find a lower rate from a local bank, but that bank may have zero experience underwriting franchise startups. And when that happens? You risk:
- Delays in funding
- Incomplete underwriting
- Potential denial due to inexperience
“Sometimes it’s okay to pay a little more and actually get the deal done,” says Beau.
The key is to work with a PLP lender—that’s an SBA Preferred Lender Program bank that underwrites loans in-house. These lenders have SBA authority and don’t need to send the file off to the SBA for final approval, which means:
✅ Faster timelines
✅ Smoother processing
✅ Less back-and-forth headaches
🎯 Choosing the Right Lender Based on Your Business Type
Your rate is important—but so is choosing the right lender for your specific franchise model or business type. Is it:
- A retail storefront with a big buildout?
- A mobile/home service business?
- A multi-unit franchise territory deal?
Each scenario requires a different approach—and Beau helps you back into the right lender strategy based on your profile, deal size, and franchise structure.
📞 Ready to Get SBA Financing That Actually Closes?
If you’re serious about funding your franchise or small business the smart way in 2024, don’t just chase the lowest rate—chase results.
👉 Book a free call with Beau Eckstein at BookWithBeau.com
Let’s map out your funding path, match you with the right lender, and get your deal across the finish line.
🎓 Want to Learn Franchise Ownership A to Z?
Check out FranUniversity.com — Beau’s free training platform that teaches you:
- How to pick the right franchise
- How to get funded
- How to launch with confidence
Whether you're leaving your W2 job or buying your fifth business, this is the education they never taught you in school.
Beau Eckstein has helped hundreds of entrepreneurs secure SBA financing over his 20+ years in the industry. Subscribe to his YouTube channel for more smart financing tips every week.