Franchise Loan Interest Rates: SBA 7(a) Rates vs Prime, FY2020 to June 2026

This edition: franchise loan interest rates, April to June 2026

Latest quarter. Lenders approved 1,805 franchise-coded SBA 7(a) loans from April 1 to June 30, 2026 (FY2026 Q3), at a median initial rate of 9.00%. With prime at 6.75% all quarter, that is prime + 2.25. Other 7(a) loans (12,551) had a median of 9.50%, prime + 2.75 (SBA 7(a) FOIA file, as of June 30, 2026; FRED DPRIME).

What we expected and what the data show. We set out to test three claims, quarter by quarter.

• Franchise loans price at about prime + 2.50, below other loans at 2.75. Holds since FY2024: franchise 2.50 in 9 of 11 quarters (2.25 in the other 2), other loans 2.75 in all 11. Before FY2024 it does not hold: in the 16 quarters from FY2020 Q1 to FY2023 Q4 the two medians were never more than 0.25 point apart, and either group could be the lower one.
• Close to the SBA maximum for larger loans. True before August 1, 2022, when the cap on loans over $50,000 was prime + 2.75 (7 years or longer): 65.5% of franchise variable loans of $50,001 to $250,000 sat exactly at it. Not true since: the cap on loans over $350,000 is 3.00 and the franchise median is 2.25, with 4.0% at the cap.
• Franchise borrowers absorbed nearly all of the 2022 to 2023 prime increase. For new loans, yes: the median rate rose 5.50 points while prime rose 5.25. For existing borrowers the file shows only the initial rate, but 89.2% of franchise loans approved in FY2022 before the first increase were variable, and SBA rules let variable rates reset as often as monthly.

Rate history: franchise SBA loan rates against prime, FY2020 to FY2026

Summary. The median franchise rate fell from 7.00% in FY2020 Q1 to 5.50% while prime was 3.25%, climbed to 11.00% in FY2023 Q4 to FY2024 Q4, and has eased to 9.00%. The spread barely moved, so the path is the prime rate’s path plus about 2.25 to 2.50 points.

Prime was 3.25% from March 16, 2020 to March 16, 2022 and 8.50% from July 27, 2023 to September 18, 2024 (FRED DPRIME). Franchise loans approved in the first window had a median rate of 5.50% (prime + 2.25, 13,732 loans) and in the second 11.00% (prime + 2.50, 7,259 loans). The 5.50-point rise exceeds the 5.25-point move in prime because the median spread widened by 0.25.

The spread gap with other loans is recent. From FY2024 Q1 the other-loan median sits at 2.75 in every quarter while franchise loans mostly sit at 2.50. Franchise coding was incomplete from October 2023 to February 2025, after SBA stopped publishing its Franchise Directory (88 FR 21074; see our SBA franchise loans study), but the gap persists after the Directory returned, so it is not a coding artifact.

Spreads by loan size against the SBA maximum rate

Summary. SBA caps the rate a lender may charge on a 7(a) loan. Until July 31, 2022 the cap on most franchise-size loans was prime + 2.75, and many franchise loans were priced right at it. From August 1, 2022 the caps rose and became size-based, but franchise spreads stayed close to 2.75, leaving room below the new caps.

The rules over the period. Before August 1, 2022, 13 CFR 120.214(d) and (e) capped variable rates on loans over $50,000 at prime + 2.25 (maturity under 7 years) or prime + 2.75 (7 years or longer), and 13 CFR 120.215 allowed 1 more point on loans of $25,001 to $50,000 and 2 more on $25,000 or less; SOP 50 10 5(K) (Subpart B, Ch. 3, Para IV) and SOP 50 10 6 (Section B, Ch. 1 and Ch. 2) restate these and set SBA Express at prime + 6.5 ($50,000 or less) or 4.5 (over $50,000). The 2022 regulatory reform rule replaced them for applications from August 1, 2022 with one schedule for all 7(a) loans: 6.5 points ($50,000 or less), 6.0 ($50,001 to $250,000), 4.5 ($250,001 to $350,000) and 3.0 (over $350,000). SOP 50 10 7, 7.1, 8 and 8.1 carry the same schedule. Fixed-rate caps were 8.0, 7.0, 6.0 and 5.0 points over prime by size throughout (83 FR 55478; 87 FR 46883).

What lenders did. In the old regime, 65.5% of franchise variable loans of $50,001 to $250,000 and 44.2% of those of $250,001 to $350,000 were priced at the maximum. For loans over $350,000 the median was 2.00, 0.75 below the 2.75 cap. After the change, the median franchise spread in the $50,001 to $250,000 band stayed at 2.75 although the cap rose by 3.25 points; just 0.8% of loans sat at the new cap. The pattern fits the old cap acting as a pricing convention. Loans over $350,000 now show a median of 2.25 against a 3.00 cap.

Limits. 0.86% of franchise variable loans show a spread above the cap we assign. Likely reasons are other base rates (LIBOR plus 3 points until 2022, the SBA Optional Peg Rate), maturity coding, or entry errors; we did not adjust them.

Fixed vs variable rates on franchise SBA loans

Summary. Franchise borrowers overwhelmingly take variable rates: 90.7% in FY2026 Q3 and 90.0% across FY2020 to FY2026. Other 7(a) borrowers use fixed rates more often (16.3% against 10.0% for franchise loans over the period).

The fixed share of franchise loans fell from 14.3% in FY2020 Q1 to 9.3% in FY2026 Q3; for other loans it fell from 22.7% to 13.4% (SBA 7(a) FOIA file, as of June 30, 2026). Fixed-rate franchise loans (4,661 over the period) had a median spread over prime of 1.25 points, well under the 5.00-point fixed cap for loans over $250,000.

A variable SBA rate resets with its base rate. Under 13 CFR 120.214(a), the first change may come on the first day of the month after disbursement and later changes no more often than monthly; lenders may set a longer first period. The note fixes the spread for the life of the loan, so a prime move passes straight to the borrower’s rate at the next adjustment.

Spreads by lender volume tier

Summary. Franchise lending is concentrated: 1,283 lenders hold franchise-coded 7(a) loans approved FY2020 Q1 to FY2026 Q3, and the top 10 by count hold 41.7% of them (top 50: 65.7%). The top 10 show a higher median spread on variable loans since August 2022 (2.75 against 2.25), but they also make smaller loans and almost never fix the rate.

Top-10 lenders’ franchise loans have a median size of $255,000, against $479,350 for ranks 11 to 50 and $471,000 for all others. Their fixed-rate share is 1.4%, against 15.8% and 16.4%. Within the three size bands over $50,000 the top-10 median is 0 to 0.50 point above the other tiers; for loans of $50,000 or less it is below the ranks 11 to 50 tier (2.75 against 3.80) (Table 4). These are observed medians across many borrowers, not offers, and the tiers do not rank any lender on price.

Limit. The FOIA BankName field is the bank the loan is currently assigned to (SBA data dictionary), which can differ from the lender that made the loan.

Franchise vs non-franchise SBA loan rates by loan size

Summary. From July 2025 to June 2026 franchise-coded loans had a median rate of 9.50% against 9.75% for other 7(a) loans. Part of that gap is size: franchise loans are larger, and larger loans carry lower spreads and lower caps. Within size bands, franchise median spreads are the same or lower.

52.5% of franchise loans in the period were over $350,000, against 28.0% of other loans; 10.5% were $50,000 or less, against 24.3%. In the over-$350,000 band both groups have a median variable spread of 2.00. In the $50,001 to $350,000 bands franchise loans sit at 2.75 against 3.00. The widest gap is in loans of $50,000 or less: 2.75 against 4.49.

Mean variable spreads were 2.33 for franchise loans and 3.00 for other loans. Giving franchise loans the size mix of other loans raises their mean to 2.58, so size explains about 37% of the 0.67-point gap. The rest sits mainly in small loans and may reflect program mix, term, collateral or borrower risk, which the file does not measure.

What the SBA maximum rate is at today's 7.00% prime

Summary. With prime at 7.00% since September 17, 2026, the SBA maximum for a variable 7(a) loan is 13.50% for $50,000 or less, 13.00% for $50,001 to $250,000, 11.50% for $250,001 to $350,000 and 10.00% over $350,000. Fixed-rate maximums run from 12.00% to 15.00%.

These are ceilings, not typical rates. At the FY2026 Q3 median spread of 2.25, a new franchise variable loan priced in October 2026 would be about 9.25%, but the spread on any one loan depends on the lender and the borrower (for what buyers can fund, see franchise affordability). SBA posts official maximum fixed rates each month (SBA FTA wiki); the September 2026 figures used prime 6.75%.

Methods and next edition

Data. Every row of the SBA 7(a) FOIA file, as of June 30, 2026 for FY2020 to June 30, 2026 (388,338 loans; 95 rows with a missing or zero rate dropped). FY2026 approvals start on November 13, 2025, after the 43-day shutdown. Prime: FRED DPRIME, the rate posted by most of the 25 largest U.S. banks. For each loan we use prime on the first business day of the approval month, the date SOP 50 10 ties to the initial variable rate; SBA’s own monthly prime in its maximum fixed-rate file matches ours in 84 of 84 months from October 2019 to September 2026. Using the approval date instead changes the franchise median spread in 5 of 27 quarters.

Next edition. After SBA posts the FOIA file as of September 30, 2026 (expected late October 2026), adding July to September 2026. The next Federal Reserve meeting is October 27 to 28, 2026. Full methods are below.