Base Rate for Cost of Money Calculations

The regulations governing the SBIC program establish interest rate ceilings for the financing SBICs provide to small businesses (see 13 CFR 107.855).  Currently, those ceilings are set at 19 percent for "Loans" and 14 percent for "Debt Securities," two types of debt products with regulatory definitions.  However, because the Trust Certificate Rate fluctuates and an SBIC's cost of capital may vary, the regulations permit SBICs to use an alternate "Base Rate for Cost of Money" to determine a new interest rate ceiling.  The process for doing so is outlined in the regulations.

When SBICs may need to conduct the alternate calculation, the SBA publishes a base rate in the Federal Register.  The table below is a list of the base rates published over the past several decades.  Since 2001, Trust Certificate rates have been too low to necessitate the publication of a new base rate and therefore the table's entries end with April 4th, 2011.

Remains in effect until next effective date, per 13 CFR 107.855

Effective 1/31/96 the maximum interest rates for loans is 19%, and the maximum interest rate for debt securities is 14% when the base rate is less than 8.125%. Please refer to 13 CFR 107.855 to determine the maximum interest rates when the base rate is at least 8.125%.

Effective 10/01/96, the Base Rate includes an additional charge payable to the SBA.