Business loan rates · October 2026
Prime Rate Is 7%: What the Fed Hike and the October 28 FOMC Mean for Business Loan Rates
The Wall Street Journal prime rate has been 7.00% since September 17, 2026, when the Federal Reserve raised its target range by a quarter point to 3.75% to 4.00%, its first increase since 2023. The next decision comes October 28. Here is exactly which business loans reprice when Prime moves, what the quarter point already costs on a typical loan, and what to do before the next meeting.
What Does a 7% Prime Rate Mean for Business Loans?
Every variable-rate business loan priced off Prime got 0.25 points more expensive in September: SBA 7(a) variable loans now cap at 10.00% to 13.50% depending on size, bank lines of credit repriced within days, and a business-purpose HELOC adjusts at its next reset. Fixed-rate term loans, equipment loans and merchant cash advances you already hold do not change. Futures markets put roughly a two-in-three chance on the Fed holding on October 28 after September inflation printed at 3.7%, but a further hike by December is priced as more likely than not. If you need a line, an SBA loan or a HELOC in the next 90 days, locking terms now is cheaper than waiting to see.
The Numbers That Matter in October 2026
The Federal Reserve’s H.15 release for October 19 shows the bank prime loan rate at 7.00%, the effective federal funds rate at 3.88% and the 10-year Treasury at 5.15%. The 10-year matters too: it is the benchmark behind fixed-rate SBA 504 debentures and most bank fixed-rate term loans, and it has been climbing even faster than Prime.
How Prime Is Set and Why It Moves With the Fed
Prime is not set by the Fed. It is the rate large U.S. banks publish for their best commercial customers, and by convention it sits 3.00 points above the top of the federal funds target range. When the Fed moves, Prime moves the next business day, by the same amount. That is why Prime fell from 8.50% in mid-2024 to 6.75% by December 2025 through a string of cuts, and why it stepped back up to 7.00% on September 17, 2026, the day after the Fed’s first hike since July 2023.
The prime rate path, 2024 to 2026
Prime moves the business day after each Fed decision, by the same amount.
Lenders quote variable business loans as Prime plus a margin, so a hold on October 28 keeps today’s pricing and a hike adds another quarter point to every one of the products below.
Which Business Loans Reprice When Prime Changes
| Product | Tied to Prime? | When it changes | At Prime 7.00% |
|---|---|---|---|
| SBA 7(a) variable | Yes (caps are Prime + 3 to + 6.5) | Quarterly reset on most loans | 10.00% – 13.50% max by size |
| SBA Express / CAPLines | Yes | Quarterly or monthly | Up to Prime + 6.5 = 13.50% |
| Bank line of credit | Yes (Prime + 1 to + 4 typical) | Immediately or next cycle | About 8% – 11% |
| Business-purpose HELOC | Yes (Prime + 0 to + 2 typical) | At the next monthly reset | About 7% – 9% |
| Online term loan | Indirectly (lender cost of funds) | New offers only; existing loans fixed | 10% – 36% APR, higher for weaker files |
| Equipment financing | Fixed at funding | New contracts only | 9.9% – 24% |
| Merchant cash advance / revenue-based | No (factor rate, fixed payback) | Never on an existing advance | Factor 1.11 – 1.50 |
The rule of thumb: if your paperwork says “Prime plus,” you pay more within a quarter. If it says a fixed rate or a factor rate, nothing changes until you take new money. Current SBA caps are explained in our SBA loan rates guide, line pricing in business line of credit rates, and how a HELOC resets in Business HELOC.
What the Quarter Point Already Costs You
Small on paper, real on the statement. Here is the effect of Prime moving from 6.75% to 7.00%, and what a second hike to 7.25% on October 28 would add, on three common loans.
| Loan | At Prime 6.75% | At Prime 7.00% (now) | If Prime goes to 7.25% |
|---|---|---|---|
| $250,000 SBA 7(a), 10 years, Prime + 3 | $3,269 / month at 9.75% | $3,304 / month at 10.00% | $3,339 / month at 10.25% |
| $100,000 bank line, fully drawn, Prime + 2 | $8,750 / year at 8.75% | $9,000 / year at 9.00% | $9,250 / year at 9.25% |
| $150,000 business HELOC, Prime + 1 | $11,625 / year at 7.75% | $12,000 / year at 8.00% | $12,375 / year at 8.25% |
Monthly payment on a $250,000 SBA 7(a) loan over 10 years
Principal and interest only, Prime + 3.00% margin. Each quarter point adds about $35 a month, or roughly $4,200 over the life of the loan.
On a 10-year SBA loan the September hike adds about $4,200 of interest over the term. That is not a reason to skip an SBA loan, which is still the cheapest money most small businesses can get, but it is a reason to run the numbers on a fixed-rate 7(a) offer if your lender provides one. Use the business loan payment calculator to test your own figures.
What October 28 Could Bring: Three Scenarios
| Scenario | Market odds (mid-October) | Prime the next day | What it means for you |
|---|---|---|---|
| Hold at 3.75% – 4.00% | About 66% | Stays 7.00% | No change to variable loans; lenders keep current pricing |
| Hike 0.25 to 4.00% – 4.25% | About 34% | 7.25% | SBA 7(a) caps rise to 10.25% – 13.75%; lines and HELOCs reset higher within a quarter |
| Hike in December instead | About 63% for a December hike | 7.25% in mid-December | Same as above, two months later; a reason to close before year-end |
September’s inflation report is why the odds are split. Headline CPI rose 0.6% for the month and 3.7% over the year, driven by a 9.1% jump in gasoline, with core inflation at 2.6%. Both came in above forecasts. A hot October report (released mid-November) would make a December hike more likely; a cooler one would let the Fed stop at one.
What to Do Before the Next Fed Meeting
If the question is less about rates and more about whether fast funding gets harder to get after a hike, we covered that in fast business funding after the Fed’s September 2026 rate hike.
- If you need an SBA loan in the next 90 days, start now. Most 7(a) loans take 30 to 60 days to close and your rate is set at closing, not at application. Ask whether the lender offers a fixed-rate option.
- Open the line of credit before you need it. Lines are approved on your file today and priced as Prime plus a margin; the margin is negotiable, Prime is not. See business lines of credit.
- Check your existing variable loans for a rate cap or conversion option. Many bank lines and some SBA loans allow a one-time switch to fixed.
- Weigh a fixed-rate term loan against a line for one-time needs. At today’s spreads an online term loan at a fixed rate can beat a line that resets twice more. Compare in business term loans.
- Homeowners: price a business-purpose HELOC while it is still Prime plus a small margin. At 7% to 9% it is often the cheapest variable money available. See Business HELOC.
- Do not let Prime push you into a cash advance. A factor rate does not move with the Fed, but a 1.30 factor over six months is far more expensive than any Prime-based product. Compare with the factor rate vs APR guide.
Common Questions
What is the prime rate today?
The Wall Street Journal prime rate is 7.00%. It rose from 6.75% on September 17, 2026, the day after the Federal Reserve raised the federal funds target range to 3.75% to 4.00%.
Will the Fed raise rates on October 28, 2026?
As of mid-October, futures markets (CME FedWatch) put about a 66% chance on the Fed holding and about a 34% chance on another quarter-point hike. A December hike was priced as more likely than not. If the Fed hikes, Prime would move to 7.25% the next day.
How does the prime rate affect SBA loan rates?
SBA 7(a) variable rates are capped at Prime plus 3.00 to 6.50 points depending on loan size, so at Prime 7.00% the maximums run 10.00% to 13.50%. Most 7(a) loans reset quarterly, so the September increase reaches existing borrowers at their next reset.
Does a Fed rate hike change my merchant cash advance?
No. A merchant cash advance has a fixed factor rate and a fixed total payback that do not change with Prime. Only new advances could be priced differently, and that depends on the funder, not the Fed.
Should I wait for rates to fall before borrowing?
Markets are pricing more hikes than cuts through the end of 2026, so waiting is more likely to cost than save. If the money has a clear return, the better move is to lock a fixed rate or open a line now and refinance if rates fall later.
Is RAN Funding a lender?
No. RAN Funding is a business financing broker. We present your application to our lender network and show you the offers you qualify for; the funding partner sets the approval, amount, rate, fees and terms.
Sources
- H.15 Selected Interest Rates, release of October 20, 2026 (bank prime loan rate, federal funds, Treasuries) — Board of Governors of the Federal Reserve System
- Fed 66% likely to hold rates steady following high inflation data (CME FedWatch odds, October 14, 2026) — Forbes
- Consumer Price Index, September 2026 — U.S. Bureau of Labor Statistics
- 7(a) loan program terms, conditions and eligibility (maximum interest rates) — U.S. Small Business Administration
- Current SBA loan interest rates, October 2026 — Lendio
- Federal Reserve meeting schedule 2026 — PrimeRates
See What You Qualify For
One application, about five minutes, soft pull only. A funding specialist tells you up front whether SBA is realistic for your file — and which faster products fit if it is not.
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