Rates, fees and comparisons
SBA or conventional loan: compare the two quotes on one figure
A bank loan without SBA backing is often shorter and has no guaranty fee; an SBA loan runs longer. Type both offers: you see which has the lower monthly payment and which costs less in total, often not the same loan.
Independent site, not a lender and not affiliated with the U.S. Small Business Administration. Loans are applied for only with an SBA lender.
SBA 7(a) or a conventional loan: which costs less?
Example, not your result yet· change a figure to see yours
Lower total cost: the conventional loan, by
$101,129
| Lower monthly payment: the SBA loan, by | $2,326/mo |
| SBA: monthly · SBA fee | $4,011 · $6,750 |
| Conventional: monthly · bank fee | $6,337 · $0 |
| SBA: total of fee and interest | $181,365 |
| Conventional: total of fee and interest | $80,236 |
| True yearly cost, SBA / conventional | 10.28% / 9.75% |
The SBA fee is added to the loan, as on the home calculator; the bank fee is paid at signing. A longer loan has the lower payment and the higher total: choose by what your monthly cash flow can carry. The true yearly cost counts the fees and is the fair single figure when the terms differ.
An SBA 7(a) loan and a conventional bank loan differ less in rate than in structure. The SBA loan adds a one-time guaranty fee, 2% to 3.75% of the guaranteed part under the FY 2027 schedule, and it carries a rate that may not exceed SBA’s cap, 10.00% to 13.50% today on a variable loan depending on size. In return it can run 10 years for equipment and working capital and 25 years for real estate, often with less cash down. A conventional loan has no SBA fee and no SBA paperwork; its term, any balloon payment and its fees are whatever the bank offers, and a shorter term is common. Because the terms differ, the monthly payment and the total interest point in opposite directions: the longer SBA loan has the lower payment and the higher total interest at the same rate. The effective rate, which spreads every fee over the life of the loan, is the fair single figure to compare.
Fee notices read and loan file counted by Radif Partners · Editorial policy · Method and sources
Same rate, different shape
To isolate the structure, the example below gives both loans the same rate: the FY 2026 median margin for loans of $250,001 to $350,000, 2.75% over prime, applied to today’s prime. The rate of a conventional offer is yours to type in the calculator; this site does not publish bank rates it cannot source.
| Loan of $300,000 | Fee | Monthly | Interest | Effective rate |
|---|---|---|---|---|
| SBA 7(a), 10 years at 9.75% | $6,750 | $4,011 | $174,615 | 10.28% |
| Conventional, same rate, 5 years, no SBA fee | $0 | $6,337 | $80,236 | 9.75% |
| Conventional, same rate, 5 years, 1% origination fee | $3,000 | $6,337 | $80,236 | 10.18% |
The five-year loan costs $2,326 more a month and saves $94,379 in interest. For a business whose cash flow is tight, the monthly figure decides; for one with room to spare, the shorter loan is cheaper. The effective rate shows what the fee does: at an equal note rate the SBA loan’s is higher by the weight of the guaranty fee, so a conventional quote is cheaper overall unless its rate is higher by more than that gap.
What else differs
Collateral: SBA forbids declining a loan only because collateral is short, but requires the lender to take what is available, including real estate with enough equity. Prepayment: an SBA loan of 15 years or more carries the subsidy recoupment fee in its first three years; a conventional loan has whatever penalty the bank writes. Rate risk: 87.0% of SBA loans are variable, so the payment follows prime. A conventional quote also comes with the bank’s own fees, which belong in the calculator’s fee field.
The best check on an SBA quote is the data: see where its rate falls on the rates page, and what the lender charged others on the lender page.