The Fed just raised rates for the first time since 2023. Your SBA loan repriced the next morning

If you are asking what SBA loan rates are right now: the prime rate has been 7.00% since Thursday 17 September 2026, so the most a lender can charge on a variable 7(a) loan is 10.00% above $350,000, 11.50% from $250,001 to $350,000, 13.00% from $50,001 to $250,000 and 13.50% at $50,000 or less. Every one of those is a quarter point higher than it was on Wednesday, because the Federal Reserve raised rates for the first time in more than three years. On its own the quarter point is small money, and I will show you exactly how small. The reason to keep reading is what the Fed said about the next one, and what that does to the price a buyer can pay for your business.

Three numbers moved in two days

On Wednesday 16 September the Federal Open Market Committee voted 12 to 0 to lift its target range for the federal funds rate by a quarter point, to 3.75 to 4.00 percent. Its statement gave the reason in three words: "Inflation remains elevated." The last time the Fed raised rates was July 2023. Between then and now it cut six times, from 5.25 to 5.50 percent down to 3.50 to 3.75 percent, the last cut landing on 11 December 2025. So this is not a tweak. It is the direction of travel reversing.

On Thursday 17 September the banks did what they always do within a day of a Fed move. Wells Fargo, U.S. Bank, PNC, M&T, BNY and BMO all announced a prime rate of 7.00 percent, up from 6.75, effective that morning, and the Fed's own daily H.15 table records prime at 6.75 on the 16th and 7.00 on the 17th. Prime is the rate banks quote their strongest business borrowers, and it sits three points above the top of the Fed's range. Almost every variable-rate small business loan, line of credit and business credit card in the country is priced as "prime plus something", so when prime moves, your rate moves with it. Nobody needs to send you a letter first.

The third number is the SBA ceiling. The SBA does not set your rate, your lender does, but it caps what a lender can charge on a variable 7(a) loan at a base rate, normally prime, plus a spread that depends on loan size:

• $50,000 or less: prime plus 6.5 points, so 13.50% today
• $50,001 to $250,000: prime plus 6.0 points, so 13.00%
• $250,001 to $350,000: prime plus 4.5 points, so 11.50%
• Over $350,000: prime plus 3.0 points, so 10.00%

Those are maximums. A good borrower with a good lender pays under them. But the spread in your note is fixed, so whatever you negotiated, the quarter point now sits on top of it.

What the quarter point actually costs

Here is the arithmetic on three loans, worked at the SBA maximum for each size so nobody can accuse me of picking a friendly number. Your own rate is probably lower. The change in the payment is nearly identical either way.

• A $500,000 ten-year loan (an acquisition, a fit-out, a refinance) at prime plus 3: 9.75% becomes 10.00%. The payment goes from about $6,539 to $6,608 a month, so $69 a month, about $830 a year.
• A $150,000 ten-year working capital loan at prime plus 6: 12.75% becomes 13.00%. Payment $2,218 to $2,240, so $22 a month, about $265 a year.
• A $40,000 seven-year equipment loan at prime plus 6.5: 13.25% becomes 13.50%. Payment $733 to $739. Six dollars.

A line of credit is simpler and faster. On a $100,000 line fully drawn, the quarter point is $250 a year of extra interest, and it started accruing on the 17th.

If those numbers look small to you, you are right. On an amortising loan a quarter point costs less than a quarter of one percent of the balance, because a chunk of every payment is principal you would be paying anyway. Nobody's cafe closes over $69 a month. Hold that thought, because the small number is the point.

One practical check before you move on: read the rate clause in your note. It says whether your rate resets monthly, quarterly or once a year. If it is quarterly, the new rate lands on your 1 October payment. If it is annual you may not see it until 2027, by which time it is unlikely to be one quarter point.

Why the next one matters more than this one

The Fed publishes its officials' own projections alongside each September decision. The ones released with this hike say three things you should plan around.

First, the median projection for the end of 2026 is 4.1 percent, a quarter point above today's range. Of the 18 officials who submitted a number, 16 put the rate above where it is now by December, and four of them saw two more rises. Read plainly: they expect to do this again before the year is out.

Second, the median for the end of 2027 is also 4.1 percent. No cuts pencilled in for next year at all. The end-2028 median is 3.9 percent, which is one cut, two years from now.

Third, the reason. They expect PCE inflation of 3.7 percent in 2026 and core inflation of 3.4 percent, against a 2 percent goal, and only get back to 2.3 percent in 2027.

Now redo the $500,000 loan with two hikes instead of one. 9.75% goes to 10.25%, and the payment goes from $6,539 to $6,677, which is $138 a month, about $1,660 a year. Still not a closure. But for most of 2025 the plan in a lot of owner-operated businesses was "stay variable, cuts are coming, fix later". The Fed has just told you, in its own numbers, that later is 2028.

Fixed or variable is a live question again

A 7(a) loan can be fixed or variable. The SBA publishes a separate ceiling for fixed-rate loans, and a fixed quote today will be higher than the variable rate you are paying, because the lender is taking the rate risk off you. The honest way to compare them is not "fixed is higher, so no". It is: is the fixed quote lower than my variable rate plus the two hikes the Fed itself expects? If it is, fixing is cheaper on the Fed's own forecast, and you get a payment that stops moving, which is worth something on its own when you are planning staff hours and a price list.

One more wrinkle from this year. Since 1 March 2026 the SBA has let lenders price variable 7(a) loans off alternative base rates instead of prime. So if you are quoted a spread, ask what it is a spread over. Compare the all-in rate you will pay on day one, not the size of the "plus".

The debt that was already expensive just got more so

The Fed's consumer credit release of 8 September puts the average interest rate on bank credit cards at 20.94 percent across all accounts and 22.15 percent on accounts actually being charged interest, as of July. Business cards are not in that survey, but they are almost always variable and priced off prime too, so they moved on the 17th like everything else.

A $20,000 card balance carried through the year at 22.15% costs about $4,430 in interest. The same $20,000 inside a 7(a) working capital loan at the 13.00% ceiling costs about $2,600. That is $1,830 a year of pure margin for moving a balance, and it dwarfs the quarter point everyone is talking about. If you have card debt you think of as temporary, the Fed just told you the temporary period runs to 2028.

The person buying your business borrows at these rates too

This is the part that reaches your exit value, and it is where a quarter point stops being small.

Most owner-operated businesses that sell for real money sell to a buyer using an SBA 7(a) loan. Buying a business is an approved use of the loan, and the term for it runs up to ten years. That buyer does not start from what your business is worth. They start from what the business's cash flow can pay every month, and they work backwards to a purchase price.

Say your business throws off enough to support $8,000 a month of loan payments after paying the new owner. At 9.50%, that payment carries about $618,000 of borrowing over ten years. At 9.75%, after this week, about $612,000. At 10.00%, after the next hike, $605,000. At 10.25%, $599,000. Every quarter point takes roughly one percent off what a financed buyer can borrow against the same business, and the Fed has just projected two of them with none coming back for two years.

The buyer does not absorb that. They ask you to. Either the price comes down, or the gap gets filled with seller financing or an earnout, which means part of your price arrives later and depends on things you no longer control. If you were thinking about selling in 2027, the rate path just reduced the cash at close a typical buyer can offer, and the owners who hold their price will be the ones whose earnings are clean enough to survive a tougher lender and who can afford to lend the buyer part of the price themselves. What is my business worth and seller's discretionary earnings explained are the two places to start if that sentence made you uneasy.