Prime Rate: 6.75% -- The Number Your Business Loan Is Priced Off
Prime rate is 6.75%. Your business loan rate is prime plus a spread (typically 1-5%). That means most small business floating-rate loans are currently priced between 7.75% and 11.75%. When prime moves, your monthly payment follows within 30 days.
Prime Rate - Historical Chart
Gray shaded areas indicate U.S. recessions.
Source: Federal Reserve FRED, Series DPRIME. Shaded areas = NBER recession dates. Updated 2026-03-09.
The Most Important Number in Small Business Lending
If you have a business loan, a line of credit, or an SBA 7(a) loan, you are paying prime rate plus a spread. Prime is currently 6.75%. Your spread is typically 1-5 percentage points depending on your creditworthiness, collateral, and loan type.
That means the range of small business loan rates right now is roughly 8% to 12%. At the low end, a well-qualified borrower with strong collateral. At the high end, a newer business or one with weaker credit. Both are paying substantially more than they would have in 2021, when prime was 3.25% and the equivalent range was 4.25% to 8.25%.
The dollar impact is significant. On a $300,000 business loan, the difference between 2021 prime (3.25%) and today's prime (6.75%) adds roughly $10,500 per year in interest -- $875 per month straight out of your operating margin.
Prime = Fed Funds + 3%. Always.
Prime rate is the most predictable rate in finance. It equals the federal funds rate plus exactly 3 percentage points. This relationship has held since 1994 with zero exceptions. When the Fed cuts by 25 basis points, prime drops 25 basis points the same day. Knowing this lets you forecast your loan payment before the Fed even votes.
What Prime Rate Means for Your Monthly Payment
Here is a quick table of monthly interest charges at different prime + spread combinations on a $250,000 loan balance:
- Prime + 1% (7.75%): ~$1,615/month in interest
- Prime + 2% (8.75%): ~$1,823/month in interest
- Prime + 3% (9.75%): ~$2,031/month in interest
- Prime + 5% (11.75%): ~$2,448/month in interest
Compare to 2021 when prime was 3.25%: prime + 2% meant $1,094/month on the same balance. The increase is $729/month -- or $8,750/year -- in pure interest expense. That is money that used to go toward payroll, inventory, or equipment.
Fixed vs Floating: The Decision That Matters
If you locked a fixed rate in 2021, you are sitting on a valuable asset. Do not refinance unless absolutely necessary. If you are on a floating rate, every Fed decision directly affects your cash flow. Consider whether fixing your rate at current levels makes sense -- it depends on whether you believe rates will go higher (fix now) or lower (stay floating).
Frequently Asked Questions
The prime rate is 6.75% as of Mar 2026. Prime equals the federal funds rate plus 3 percentage points and moves the same day the Fed changes rates.
Most business loans are priced as prime + spread (1-5%). At prime of 6.75%, your rate is likely between 8% and 12% depending on your credit profile and collateral.
Prime changes the same day the Fed announces a rate decision -- usually within hours. Banks publish new prime rates immediately. Your next loan statement will reflect the new rate.
Prime peaked at 21.5% in December 1980 during the Volcker inflation-fighting era. Current 6.75% is high by post-2008 standards but moderate historically.
If you believe rates will rise, lock now. If you believe cuts are coming (markets price 1-2 cuts ahead), staying floating lets you benefit from each cut. Each 25bp cut on $250K of debt saves ~$52/month.
Federal Reserve FRED series DPRIME. Published daily by the Wall Street Journal based on rates posted by the largest banks.