The Rate Ladder — From Fed to Your Business
🏛️
Federal Funds Rate
Set by the FOMC. The overnight rate banks charge each other. Floor for all borrowing.
↓ Banks add 3.00% spread
🏦
Prime Rate
Fed rate + 3%. Benchmark for most business loans and lines of credit.
8.50%
Moves with Fed rate
↓ SBA adds 2.75%
🏢
SBA 7(a) Variable Loan
Prime + 2.75% for most loans. For owner-operated businesses up to $5M.
~11.25%
Variable, resets quarterly
🔧
SBA 504 Fixed Rate
Fixed-rate financing for real estate and equipment. Lower than 7(a) variable.
~6.8%
Fixed for 10–25 years
💼
Business Line of Credit
Prime + 1–3%. Revolving, variable-rate. Most common short-term business credit.
9.5–11.5%
Variable, bank-dependent
🏠
30-Year Mortgage
10-year Treasury yield + ~2.6% spread. For residential and small commercial properties.
6.94%
30Y fixed, national avg
💳
Business Credit Card
Highest cost credit available. Never carry a balance month-to-month at these rates.
22–28%
⚠️ Most expensive debt
↓ The other side — what your cash can earn
💰
Business High-Yield Savings (HYSA)
Best rates from Mercury, Bluevine, Relay. Move idle cash here immediately.
4.75–4.92%
FDIC insured, no lock-up
📋
Treasury Bills (3-month)
Risk-free U.S. government debt. Available through TreasuryDirect.gov. No fees.
5.24%
Highest risk-free yield
Federal Funds Rate — 2 Year History
Jun'24AugOctDecFeb'25AprJunAugOctDecFeb'26Jun ▸
The Fed raised rates rapidly from 0.25% (early 2022) to 5.50% (July 2023), then held. First cut anticipated September 2026. At the current pace, rates may reach 4.75% by year-end 2026.
Bank Lending Standards — Are Banks Tightening? (Fed SLOOS Survey)
The Fed's Senior Loan Officer Opinion Survey measures whether banks are tightening or loosening credit standards. Positive = tightening (harder to borrow). Negative = loosening (easier to borrow).
C&I loans — large firms
Tightening
C&I loans — small firms
Tightening
Commercial real estate
Tight
Consumer loans
Mild tight
Banks are tightening across all loan categories. This means higher credit standards, lower loan-to-value ratios, and increased documentation requirements — even for businesses with good credit. Apply for credit before you need it.
Best Rate Options — Ranked for Small Businesses
| Product |
Rate |
Best for |
Status |
3-Month T-Bills
TreasuryDirect.gov |
5.24% |
Cash you won't touch for 90 days |
Best yield |
Mercury HYSA
Mercury.com |
4.92% |
Operating reserve, instant access |
Recommended |
Bluevine Business
Bluevine.com |
4.80% |
Up to $250K at top rate |
Great option |
SBA 504 Loan
Fixed rate |
~6.8% |
Real estate & equipment, long-term |
Best fixed borrow |
SBA 7(a) Variable
Variable rate |
~11.25% |
Working capital, if needed |
Use sparingly |
Business Credit Card
Revolving |
22–28% |
Pay in full monthly only |
Never carry balance |
What this means for your business
🔒
Fix your rates while you can
Variable debt at 11%+ is expensive and unpredictable. The SBA 504 at ~6.8% fixed is the smartest long-term borrow in this environment for real estate or equipment.
💵
Your cash is finally earning
At 4.92%, a $100K cash reserve earns ~$4,920/year risk-free. Move idle business cash to a HYSA or T-Bills today. Don't leave it in a 0.01% checking account.
📉
Banks are tightening — apply early
If you think you might need a credit line in the next 12 months, apply now. Banks are increasing requirements. It's always easier to get credit when you don't need it.
📅
First cut likely September 2026
Markets price 65% probability of a 25bps cut at the Sept 16–17 FOMC meeting. Don't delay major borrowing decisions waiting for cuts — save them as a refinancing opportunity.