Section 03
There is no single SBA rate: similar borrowers pay materially different prices.
Headline stat
Overview
There is no single SBA rate
OBSERVED: on variable-rate 7(a) deals matched for industry, fiscal year, size band, and rate structure, p10-to-p90 lender spread runs about 220 basis points. Two borrowers with comparable profiles can price almost two percentage points apart depending on who originates the loan.
INTERPRETATION: the dispersion looks lender-specific rather than risk-specific. Two of the widest-priced lenders in the public record — Newtek Bank, NA (n=6,683 funded variable-rate 7(a) loans, FY23–25) and Readycap Lending, LLC (n=6,747) — both disclose broker-channel distribution in their public filings. The deeper mechanism (origination channel, funding model, gain-on-sale) is covered in Section 5; this section is about the dispersion itself.
Framework
Three places the cost shows up
Borrower cost accrues in three places. Only the first is fully visible at signing; the other two are partial or buried.
| Cost | What it is | Visible at signing? | Impact on $2M / 10 yr |
|---|---|---|---|
| 1. Spread | Margin over prime the lender charges. | Yes — rate is on the term sheet. | ~$200K swing between p10 and p90 lenders on comparable deals. |
| 2. Fees | Packaging, origination, broker-referral fees. | Partially. SBA guaranty fee disclosed; packaging / referral fees not in the public record. | $59K–$186K range at closing (Chart 8). |
| 3. Escape cost | Prepayment penalties + refi costs — the cost of exiting once the rate is locked. | No — buried in the promissory note. | 52% of $500K+ variable 7(a) loans pay off before half their term; pattern consistent with refi exit (Chart 5). |
Chart 1A
Rate Dispersion Scorecard
Variable-rate 7(a) Guaranty + FA$TRK, funded only, by size band and fiscal year. Cells are p10 / p50 / p90 of spread (initial interest rate minus prime at approval). (7(a), FY23–FY25, n=150,306, 7(a) Guaranty + FA$TRK, variable, funded (excl. CANCLD/NOT FUNDED))
| Size band | FY23 p10 / p50 / p90 (n) | FY24 p10 / p50 / p90 (n) | FY25 p10 / p50 / p90 (n) | FY25 p10–p90 (bps) |
|---|---|---|---|---|
| $0-$150K | P+1.50% / P+2.75% / P+5.80% (22,481) | P+2.00% / P+3.00% / P+6.50% (30,379) | P+2.00% / P+3.00% / P+6.49% (27,898) | 449 |
| $150K-$350K | P+1.00% / P+2.50% / P+3.00% (8,338) | P+1.00% / P+2.75% / P+3.49% (8,976) | P+1.50% / P+2.75% / P+4.50% (10,734) | 300 |
| $350K-$500K | P+0.50% / P+2.00% / P+2.75% (3,262) | P+1.00% / P+2.50% / P+3.00% (5,032) | P+1.00% / P+2.75% / P+3.00% (5,962) | 200 |
| $500K-$1M | P+0.75% / P+2.00% / P+2.75% (4,104) | P+0.75% / P+2.25% / P+3.00% (4,321) | P+0.75% / P+2.25% / P+3.00% (5,210) | 225 |
| $1M-$2M | P+0.50% / P+2.00% / P+2.75% (2,708) | P+0.50% / P+2.00% / P+3.00% (3,000) | P+0.50% / P+2.00% / P+2.75% (3,332) | 225 |
| $2M-$5M | P+0.25% / P+1.50% / P+2.75% (2,287) | P+0.25% / P+1.52% / P+2.75% (2,330) | P+0.14% / P+1.50% / P+2.75% (3,150) | 261 |
OBSERVED: in FY25, the p10-to-p90 spread across lenders is about 449 bps in the $0–$150K band and about 261 bpsin the $2M–$5M band. INTERPRETATION: dispersion is widest for the smallest borrowers, where shopping costs are highest and rate transparency is lowest, and narrows as deal size grows.
Chart 1B
Prime vs. Spread, Three Conventions
Three central-tendency conventions on funded variable 7(a) Guaranty + FA$TRK, FY21–FY25. Under all three, borrowers captured the full 91 bp prime pass-through from FY24 to FY25. (7(a), FY21–FY25, n=223,872, 7(a) Guaranty + FA$TRK, variable, funded (excl. CANCLD/NOT FUNDED))
| FY | n | Avg Prime | Vol-Weighted Spread | Simple-Avg Spread | Median Spread | p10 / p90 |
|---|---|---|---|---|---|---|
| FY2021 | 35,709 | 3.25% | P+1.90% | P+2.34% | P+2.25% | P+1.10% / P+3.00% |
| FY2022 | 34,659 | 4.10% | P+1.82% | P+2.44% | P+2.25% | P+1.00% / P+4.50% |
| FY2023 | 43,180 | 7.83% | P+1.80% | P+2.60% | P+2.50% | P+1.00% / P+4.75% |
| FY2024 | 54,038 | 8.48% | P+2.01% | P+2.96% | P+2.75% | P+1.25% / P+5.50% |
| FY2025 | 56,286 | 7.57% | P+1.99% | P+2.93% | P+2.75% | P+1.25% / P+5.00% |
OBSERVED: from FY24 to FY25, prime fell 91 bps, vol-weighted spread tightened 1.6 bps (1.994% → 1.985%), median spread held at P+2.75%, and the median borrower’s rate fell a full 100 bps. The annual pass-through is clean under every averaging convention.
The larger cost to individual borrowers is not mean compression but dispersion across lenders. On comparable deals in FY25, moving from the p10 lender to the p90 lender is about 375 bps — larger, over a 10-year loan, than the 175 bps of cumulative prime relief since the cycle turned.
Chart 2
Industry Dispersion with Named Lender Extremes
Top-14 NAICS clusters by variable 7(a) volume, $1M–$3M, funded, FY23–25. Each row shows cluster p10 / p50 / p90 plus the named cheap-tier and expensive-tier lender (n ≥ 5 in bucket). (7(a), FY23–FY25, n=8,699, 7(a) Guaranty + FA$TRK, variable, funded, $1M-$3M, top-14 NAICS clusters by volume)
| Cluster | n | p10 / p50 / p90 | Cheap tier (n ≥ 5) | Expensive tier (n ≥ 5) |
|---|---|---|---|---|
| Restaurants & Food Service | 1,713 | P+0.75% / P+2.00% / P+2.75% | TD Bank, National Association (n=5, P−0.28%) | Newtek Bank, National Association (n=47, P+3.01%) |
| Miscellaneous Retail | 997 | P+0.75% / P+1.75% / P+2.75% | Mountain America FCU (n=6, P−0.70%) | Newtek Bank, National Association (n=17, P+3.04%) |
| Specialty Trade Contractors | 916 | P+0.75% / P+2.25% / P+3.00% | Mountain America FCU (n=7, P−0.87%) | Newtek Bank, National Association (n=39, P+2.99%) |
| Manufacturing | 868 | P+0.09% / P+2.00% / P+3.00% | Mountain America FCU (n=5, P−0.90%) | Newtek Bank, National Association (n=62, P+2.99%) |
| Hotels & Accommodation | 828 | P+1.00% / P+1.25% / P+2.25% | U.S. Bank, National Association (n=5, P−0.29%) | Newtek Bank, National Association (n=5, P+3.00%) |
| Food & Beverage Stores | 639 | P+1.00% / P+1.75% / P+2.75% | U.S. Bank, National Association (n=8, P−0.55%) | Newtek Bank, National Association (n=6, P+3.00%) |
| Wholesale Trade | 590 | P+0.25% / P+2.00% / P+3.00% | Comerica Bank (n=8, P−0.44%) | Newtek Bank, National Association (n=67, P+3.03%) |
| Administrative & Waste Services | 511 | P+1.00% / P+2.25% / P+3.00% | Enterprise Bank & Trust (n=5, P+0.45%) | Newtek Bank, National Association (n=32, P+3.01%) |
| Auto Repair & Maintenance | 497 | P+0.50% / P+1.75% / P+2.75% | America First FCU (n=5, P−0.87%) | Newtek Bank, National Association (n=9, P+3.00%) |
| Transportation & Warehousing | 478 | P+0.75% / P+2.25% / P+3.00% | U.S. Bank, National Association (n=10, P−0.07%) | Newtek Bank, National Association (n=5, P+3.00%) |
| Arts, Entertainment & Recreation | 470 | P+1.00% / P+2.25% / P+3.00% | Zions Bank (n=5, P+1.20%) | Newtek Bank, National Association (n=18, P+3.03%) |
| Physician & Dental Offices | 445 | P−0.50% / P+1.00% / P+3.00% | U.S. Bank, National Association (n=5, P−1.17%) | Newtek Bank, National Association (n=29, P+3.03%) |
| Social Assistance | 381 | P+0.35% / P+1.75% / P+2.75% | U.S. Bank, National Association (n=6, P−0.38%) | Newtek Bank, National Association (n=7, P+3.04%) |
| Real Estate | 366 | P+0.25% / P+1.35% / P+2.75% | U.S. Bank, National Association (n=5, P+0.23%) | Newtek Bank, National Association (n=11, P+3.02%) |
OBSERVED: Newtek Bank, NA is the named expensive-tier lender in 14 of 14 top industry clusters inside the $1M–$3M variable-rate 7(a) bucket (FY23–25, n ≥ 5 per bucket). INTERPRETATION: the expensive-tier extremes are concentrated in a small number of lenders rather than scattered across the field. Section 5 examines the mechanisms behind that pattern.
Chart 3
The Signature $2M HVAC Example
One worked example. NAICS 238220 (Plumbing, Heating, AC Contractors), $1M–$3M, variable 7(a) Guaranty + FA$TRK, funded, FY23–25. (7(a), FY23–FY25, n=229, 7(a) Guaranty + FA$TRK, variable, funded, NAICS 238220 (HVAC), $1M-$3M)
| Lender (deals in bucket) | Rate at P=6.75% | Monthly P&I | 10-yr total interest |
|---|---|---|---|
| Live Oak Banking Company (n=38) — P+1.43% | 8.18% | $24,456 | $934,739 |
| Newtek Bank, National Association (n=5) — P+3.00% | 9.75% | $26,154 | $1,138,486 |
| Delta | +157 bps | +$1,698/mo | +$203,747 |
The HVAC example illustrates a pricing pattern visible across this lender’s book: in the broker-channel cohort below, Newtek’s median spread lands at exactly P+3.00% in nearly every comparable bucket, and a large share of its variable-rate book prices at or above cluster p90. The HVAC case is one instance of that wider pattern, not a lone outlier.
Chart 4
Fixed vs. variable rate structure
$1.5M–$2.5M 7(a) Guaranty + FA$TRK, funded, FY23–25. (7(a), FY23–FY25, n=7,316, 7(a) Guaranty + FA$TRK, $1.5M-$2.5M, funded (excl. CANCLD/NOT FUNDED))
| Rate structure | n | Avg rate | Avg spread |
|---|---|---|---|
| Variable | 5,889 | 9.61% | P+1.70% |
| Fixed | 1,427 | 7.54% | P−0.37% |
OBSERVED: in FY23–25, fixed-rate 7(a) loans in the $1.5M–$2.5M band priced below prime on average, while variable-rate loans in the same band averaged prime + 170 bps. At origination, fixed looked about 207 bps cheaper. 80.5% of approvals in this band were written variable. HYPOTHESIS: variable paper is more liquid in the secondary market, which may help explain the variable default; Section 5 examines the funding and secondary-market mechanics directly.
Chart 5
Prepayment by origination spread
FY15–FY19 originations, $500K+ variable 7(a), observed through FY25 so each cohort is mature enough to report outcomes. (7(a), FY15–FY19, n=49,109, 7(a), >= $500K, variable rate, term_months not null)
| Spread at origination | n | % paid in full before half term | % charged off |
|---|---|---|---|
| P+<1.00% | 3,416 | 39.8% | 1.0% |
| P+1.00-1.99% | 16,680 | 51.9% | 1.4% |
| P+2.00-2.74% | 18,606 | 45.6% | 3.4% |
| P+2.75%+ | 10,407 | 41.7% | 5.4% |
OBSERVED: roughly half of $500K+ variable 7(a) loans in these cohorts pay off before half their term, and chargeoff rates climb monotonically with origination spread (0.97% at P+<1.00% vs 5.42% at P+2.75%+, a 5.6x difference). INTERPRETATION: the prepayment pattern is consistent with borrowers refinancing out of more expensive pricing once the prepayment penalty window closes, though outcome data alone cannot attribute motivation definitively.
Chart 6
Two broker-channel lenders, two pricing shapes
The public SBA record shows lender, rate, industry, and borrower state, but not whether a broker originated the deal. As a proxy, we look at two lenders whose public filings disclose broker-channel distribution — Newtek Bank, NA and Readycap Lending, LLC — and describe the dispersion fingerprint of each. Section 5 covers the underlying funding and secondary-market mechanics; here the focus is simply where these lenders sit within the comparable-deal distribution.
Newtek Bank, NA
OBSERVED: across 93 (cluster × FY) buckets at n ≥ 5, Newtek’s median spread is exactly P+3.00% in 90 of 93 buckets. Book-wide: 6,683 funded variable-rate 7(a) loans, with 74.6% priced at exactly P+3.00% to the basis point. Against cluster × FY × size_band comparability buckets (n ≥ 5), the distribution is:
| Cluster position | Newtek | Live Oak (reference) |
|---|---|---|
| Below cluster p25 (cheap tier) | 0.25% | 38.05% |
| Cluster p25–p50 | 7.01% | 34.85% |
| Cluster p50–p75 | 25.80% | 14.53% |
| Cluster p75–p90 | 18.16% | 5.49% |
| At or above cluster p90 (most expensive decile) | 48.78% | 7.09% |
About 48.8% of Newtek’s funded book sits at or above the most expensive 10% of comparable deals; about 66.9% sit at or above the most expensive 25%. For reference, 72.9% of Live Oak’s 4,502 matched loans sit below cluster median. INTERPRETATION: the two lenders’ book shapes barely overlap, and Newtek’s distribution looks more like a consistent pricing policy than a book of underwritten risk. HYPOTHESIS: origination channel and funding mix may help explain the difference — the mechanics live in Section 5.(7(a), FY23–FY25, n=6,683, Newtek Bank NA, variable-rate 7(a) Guaranty + FA$TRK, funded)
Readycap Lending, LLC
OBSERVED: cluster-level median spread moved from P+2.75% in FY23 to P+6.50% across most clusters in FY24, a 375 bp shift that applied in the same fiscal year across every industry at once. FY25 median retraced to P+3.00% while the mean remained elevated at P+4.47%, indicating a heavy right tail.
| FY | n | Avg spread | Median spread |
|---|---|---|---|
| FY2023 | 874 | P+2.79% | P+2.75% |
| FY2024 | 3,233 | P+4.92% | P+6.50% |
| FY2025 | 2,640 | P+4.47% | P+3.00% |
Book-wide cluster-position distribution (n_matched=6,740): 53.8% of Readycap’s funded variable-rate book sits in the most expensive 10% of comparable deals. The two broker-channel lenders show different shapes (Newtek’s flat ceiling, Readycap’s step reset) but the same directional result: their books cluster in the expensive tier of the comparable-deal distribution.(7(a), FY23–FY25, n=6,740, Readycap Lending LLC, variable-rate 7(a) Guaranty + FA$TRK, funded)
Sizing the broker-channel gap
OBSERVED: the spread gap between the broker-channel cohort (Newtek + Readycap + BayFirst) and the market median on comparable deals is about 150 basis points. We treat this as an upper boundon any broker-related premium, not a point estimate: the gap collapses at least three things the public record cannot separate — actual referral-fee pass-through, credit-quality differences in the broker-channel cohort, and business-model differences between channel-dependent and direct-origination lenders. On a $2M / 10-year 7(a) at 2025 prime, 150 bps of spread is roughly $135,000 in lifetime interest. Section 5 examines the underlying mechanisms.
Chart 7
Restaurants: the dispersion reappears
A second check on a different industry. Restaurants & Food Service at $1.5M–$2.5M, variable 7(a), FY23–25 shows a similar cheap-tier-to-expensive-tier gap, with different named lenders at the extremes. (7(a), FY23–FY25, n=721, 7(a) Guaranty + FA$TRK, variable, funded, $1.5M-$2.5M, NAICS cluster: Restaurants & Food Service)
| Lender (deals in bucket) | Avg spread | Role |
|---|---|---|
| Enterprise Bank & Trust (n=10) | P+0.75% | Cheap tier named lender |
| Live Oak Banking Company (n=25) | P+1.03% | Cheap tier (reference; see Chart 3) |
| Readycap Lending, LLC (n=30) | P+2.36% | Expensive tier (broker-channel disclosed) |
| Newtek Bank, National Association (n=17) | P+3.03% | Expensive tier (flat ceiling) |
Enterprise Bank & Trust (n=10) priced at P+0.75% while Readycap Lending (n=30) averaged P+2.36% on the same $2M restaurant profile. At 2026 prime, that is roughly $248,958 in extra interest over ten years — a similar dispersion pattern to the HVAC example, on a different industry.
Chart 8
Fees: disclosed vs. modeled
Only the SBA guaranty fee is statutorily defined and visible in the public record. Packaging, referral, and origination fees are modeled from SBA SOP 50-10 published ranges on a $2M 7(a) loan.
| Fee | Low case | High case | SOP cap / notes |
|---|---|---|---|
| SBA guaranty fee | $56,250 | $56,250 | Fixed by statute (2.75% on guaranteed portion above $1M in current SOP schedule) |
| Packaging fee | $2,500 | $30,000 | $30K SOP cap |
| Referral / broker fee | $0 | $60,000 | 3% of loan amount per SBA Form 159 |
| Origination fee | $0 | $40,000 | 0-2% lender-discretionary |
| Total out-of-pocket at closing | $58,750 | $186,250 |
On a $2M SBA 7(a), modeled closing fees range from roughly $59K to $186K, with most of the variation sitting outside the statutorily-set guaranty fee.
Methodology & data
See also
Where these numbers connect
- Section 1 — The Lending Scorecard: portfolio-level view of the 7(a) and 504 market. The prime-vs-spread trajectory summarized there is detailed here in Chart 1B.
- Section 2 — The Borrower Playbook: applies the dispersion observed here to the borrower’s decision path, including screening signals drawn from the broker-channel proxy.
- Section 4 — Where the Money Flowed: volume and deal-mix view. Cheap-tier lenders named here show up in the acquisition-cohort volume there.
- Section 5 — Who Flips Your Loan: the underlying mechanism story. Funding models, secondary-market sales, and gain-on-sale economics that may help explain the dispersion shown here.
- Section 6 — The Lender League Table: lender-by-lender scorecards. The 220 bps dispersion in this section is the comparable-deal cut; the league table reports broader lender-level figures under a different denominator.
Up next
04Where the Money Flowed
Acquisitions were 9.2% of FY25 deal count but 20.4% of dollars. A few specialist lenders wrote most of them.