In this paper, we study the performance of diagonally loaded beam-formers in the presence of steering vector errors i.e. when there exists a mismatch between the actual steering vector of interest and the presumed one. We consider the problem of optimally selecting the loading level with a view to maximise the signal to interference plus noise ratio. Ignoring finite-sample effects we show that, in the presence of strong low-rank interference and broadband noise, the optimal loading level is negative. Numerical simulations attest to the validity of the analysis and show that diagonal loading with the optimal loading factor derived herein provides a performance close to optimum. It is also shown that negative diagonal loading is effective in finite-sample as long as the steering vector errors dominate over the finite-sample errors.