Interest Rates
The SBA Cost of Capital Index: What Rate Moves Have Done to Debt-Service Coverage
By David Jones, MAI, CCIM
Last updated: 28 July 2026 · Next update: Q4 2026
Current reading
| Measure | Latest | FY2021 | Change |
|---|---|---|---|
| Average initial rate, 7(a) | 10.24% (FY2025) | 5.50% | +474 bp |
| Most recent quarter | 9.47% (2026 Q1) | — | — |
| Variable-rate share | 86.6% | 80.6% | +6.0 pts |
| Monthly payment, $500k / 10yr | $6,674 | $5,426 | +23.0% |
| NOI required at 1.15x DSCR | $92,103 | $74,883 | +23.0% |
A business borrowing $500,000 over ten years needed $74,883 of net operating income to clear a 1.15x coverage test in FY2021. Today it needs $92,103 — 23% more, for the same money. This index tracks SBA 7(a) pricing and what it does to the coverage math, and is updated quarterly.
The FY2024 peak was 11.12%. Rates have eased since, and the most recent quarter reads 9.47% — the first sustained move below 10% since FY2022.
Dataset: the full rate series is available for download at the end of this article under an attribution licence.
The annual series
Average initial interest rate at approval, SBA 7(a), by fiscal year:
| Fiscal year | Loans | Mean rate | Median | 10th pct | 90th pct | Variable share |
|---|---|---|---|---|---|---|
| FY2010 | 39,912 | 6.45% | 6.00% | 5.25% | 8.00% | 85.1% |
| FY2011 | 45,628 | 6.30% | 6.00% | 5.00% | 8.00% | 80.4% |
| FY2012 | 38,889 | 6.23% | 6.00% | 4.75% | 8.39% | 78.4% |
| FY2013 | 40,416 | 6.11% | 5.95% | 4.75% | 8.25% | 77.4% |
| FY2014 | 45,962 | 6.04% | 5.85% | 4.75% | 8.25% | 75.3% |
| FY2015 | 55,421 | 6.12% | 5.90% | 4.74% | 8.65% | 76.6% |
| FY2016 | 56,787 | 6.27% | 6.00% | 4.75% | 9.00% | 77.8% |
| FY2017 | 56,079 | 6.62% | 6.25% | 5.00% | 9.24% | 77.7% |
| FY2018 | 54,222 | 7.29% | 7.00% | 5.60% | 9.99% | 77.8% |
| FY2019 | 45,686 | 7.91% | 7.75% | 6.20% | 10.50% | 79.1% |
| FY2020 | 36,481 | 6.46% | 6.00% | 4.75% | 8.75% | 75.8% |
| FY2021 | 45,372 | 5.50% | 5.50% | 4.25% | 6.50% | 80.6% |
| FY2022 | 42,315 | 6.43% | 6.00% | 4.75% | 8.50% | 83.8% |
| FY2023 | 51,778 | 10.12% | 10.25% | 7.75% | 12.75% | 85.1% |
| FY2024 | 63,095 | 11.12% | 11.25% | 8.85% | 13.50% | 86.4% |
| FY2025 | 65,149 | 10.24% | 10.25% | 8.12% | 12.50% | 86.6% |
FY2021 was the cheapest year in the series at 5.50%. FY2024 was the most expensive at 11.12%. The programme doubled in cost across three fiscal years.
Note the 10th and 90th percentile columns. In FY2021 the spread between a cheap loan and an expensive one was 225 basis points. By FY2024 it was 465. Rate dispersion widened as the level rose.
The quarterly series
Annual averages conceal turning points. The quarterly series from 2019 shows where the moves actually happened, and where they are now.
The rate rose from 6.43% across FY2022 to above 11% within eighteen months, and has retraced to 9.47% in 2026 Q1. That most recent figure is the first sustained reading below 10% since FY2022, and it matters more to a borrower pricing a deal today than any annual average does.
What it does to the coverage math
Rate movement is abstract until it becomes debt service. On a $500,000 loan over ten years:
| Approval year | Rate | Monthly payment | Annual debt service | NOI needed at 1.15x | NOI needed at 1.25x |
|---|---|---|---|---|---|
| FY2021 | 5.50% | $5,426 | $65,115 | $74,883 | $81,394 |
| FY2023 | 10.12% | $6,640 | $79,689 | $91,643 | $99,612 |
| FY2025 | 10.24% | $6,674 | $80,089 | $92,103 | $100,112 |
The same business, the same loan, four years apart, needs 23% more net operating income to clear the same coverage test.
That is the entire story of SBA underwriting since 2022 in one line. Nothing about the businesses changed. The threshold moved.
Across loan sizes, at current pricing:
| Loan size | FY2021 payment | FY2025 payment | Monthly increase |
|---|---|---|---|
| $250,000 | $2,713 | $3,337 | +$624 |
| $500,000 | $5,426 | $6,674 | +$1,248 |
| $1,000,000 | $10,852 | $13,348 | +$2,496 |
A borrower who could have supported a $1 million loan in FY2021 is now looking at $2,496 more per month against the same cash flow.
Small borrowers pay more
Pricing is not uniform. Across FY2023–FY2025 originations:
| Loan size | Loans | Average rate | Variable share |
|---|---|---|---|
| Under $150,000 | 91,898 | 11.27% | 88.1% |
| $150,000–$350,000 | 32,745 | 10.15% | 86.4% |
| $350,000–$1M | 34,257 | 9.63% | 82.8% |
| $1M–$2.5M | 14,067 | 9.26% | 80.7% |
| Over $2.5M | 7,055 | 9.16% | 84.7% |
A borrower under $150,000 pays 211 basis points more than one above $2.5 million. That reflects the SBA's own maximum-spread schedule, which permits a higher spread over prime on smaller loans, and it is compounding: the smallest borrowers pay the most for capital and, as the loss-severity data shows, fail most often.
They are also the most exposed to rate movement. 88.1% of loans under $150,000 carry variable rates — the highest share of any band.
The variable-rate exposure
The variable-rate share of SBA 7(a) lending has risen steadily and is now at its highest level in the series:
- FY2014: 75.3%
- FY2021: 80.6%
- FY2025: 86.6%
- 2026 Q1: 87.5%
Nearly nine in ten SBA borrowers are on floating terms. That cut hard against the FY2023 and FY2024 cohorts, whose debt service rose with prime after closing — and it is the reason those vintages are failing faster than any measured book.
It cuts the other way now. Rate relief flows straight through to a floating-rate loan without a refinance, a new appraisal or a prepayment penalty. A borrower who closed at 11.12% in FY2024 is already paying less today, automatically.
This is the single most under-appreciated fact about the current SBA book: the borrowers most damaged by the rate cycle are also the ones positioned to benefit fastest from its reversal.
How to use this index
If you are underwriting, the NOI table is the practical output. A project that pencilled at a 1.15x coverage in 2021 does not pencil today at the same revenue. The gap is 23%, and it has to come from somewhere — more revenue, lower expenses, more equity, or a longer term.
If you are a borrower comparing quotes, the size bands are the benchmark. If you are borrowing $200,000 and being quoted 12%, you are above the band average of 10.15%. If you are borrowing $2 million at 9.5%, you are close to market.
If you are modelling a project, note that the 10th–90th percentile spread is now 438 basis points. A single point rate assumption in a pro forma carries more error than it did five years ago, and sensitivity analysis around it is no longer optional.
If you already hold floating-rate SBA debt, your payment has been falling since the FY2024 peak, and will continue to if prime moves further. That is worth modelling before considering a refinance that would cost you fees to achieve less.
Limitations
Initial rate is at approval. The InitialInterestRate field records the rate at the time the loan was approved. For the 86.6% of loans on variable terms, the rate actually paid has moved since. This index measures the cost of capital at origination, not the current cost of an outstanding book.
No spread decomposition. The extract does not record the base rate and spread separately, only the combined initial rate. Movements therefore reflect both prime-rate changes and any shift in lender spreads, and the two cannot be separated here.
504 is excluded. The 504 file does not carry an interest rate field. Debenture pricing is set at monthly sale and is published separately by the SBA.
Payment and DSCR figures are illustrative. They assume a fully amortising ten-year term at the stated rate with no fees, holdbacks or balloon. Real files differ.
The most recent quarter is partial. The data snapshot is 31 March 2026, so 2026 Q1 reflects approvals through that date.
Methodology annex
Source. SBA 7(a) FOIA loan-level extracts, as of 31 March 2026. Records with status CANCLD excluded. Records with recorded initial rates outside 1%–25% excluded as data errors.
Rate. InitialInterestRate as recorded at approval, averaged unweighted across loans in the period. Median and percentiles computed on the same basis.
Variable share. Proportion with FixedOrVariableInterestInd = V.
Quarterly series. Grouped on ApprovalDate calendar quarter, from 2019 Q1, restricted to quarters with 800 or more originations.
Payment and coverage. Standard amortisation on a 120-month term at the stated annual rate. Debt-service coverage figures are annual debt service multiplied by the stated coverage ratio.
Size bands. FY2023–FY2025 originations by GrossApproval.
Update cadence. This index is recomputed and republished quarterly on this URL as new FOIA releases are issued.
Download the data
The rate series — annual FY2010–FY2025 and quarterly from 2019, with mean, median, percentiles, variable share and by-size-band pricing — is available as a CSV.
Licence. This index may be reproduced, analysed and republished, in whole or in part, for any purpose including commercial use, provided that sba-feasibility-study.com is credited as the source with a link to this page.
Frequently asked questions
Sources
- US Small Business Administration, 7(a) FOIA loan-level data, as of 31 March 2026.
- Board of Governors of the Federal Reserve System, bank prime loan rate, selected interest rates (H.15).
Index compiled by the research team at sba-feasibility-study.com from public SBA data. Updated quarterly. Last updated: 28 July 2026. Next update: Q4 2026.