The Fed just raised rates again. Here's what it means for business loans and lines of credit

On September 16 the Federal Reserve raised its benchmark rate by a quarter point to a range of 3.75% to 4%, and officials' projections point to another increase before the end of the year. For small businesses that borrow, that ripples out in predictable ways.

What gets more expensive, and how fast

• Lines of credit and variable-rate loans. Many are priced off the prime rate, which banks typically move in step with the Fed. When the Fed raises rates, the rate on these balances usually rises within a billing cycle or two.
• Business credit cards. Most carry variable rates tied to prime, so carried balances cost more.
• New fixed-rate loans. Existing fixed-rate loans don't change. New ones are priced off current market rates, and longer-term Treasury yields rose this week, with the 10-year ending Friday at 5.01%.
• Equipment financing. New deals are generally priced off current rates, so quotes may be higher than a few months ago.

What doesn't change

Loans with a fixed rate you've already signed stay the same. Some funding products, such as merchant cash advances and revenue-based financing, are priced with a fixed cost agreed up front rather than a variable interest rate, so a Fed move doesn't change an existing agreement, though pricing on new deals can shift with the market.

Five moves for borrowers right now

1. List your variable-rate debt and estimate what a higher rate adds to your monthly payments.
2. Pay down the most expensive variable balances first when you have extra cash.
3. Consider locking in a fixed rate for a major planned purchase if the payment works for your cash flow.
4. Keep a cushion. Higher borrowing costs are harder to absorb when cash is tight, so build reserves where you can.
5. Pick the right product, not the most applications. Start with one funder that offers several products so a single application can be matched to what fits, instead of applying everywhere and collecting hard credit checks. Our guides on how to qualify for a business loan and line of credit vs. merchant cash advance explain the options.

The bigger picture

The Fed raised rates because it sees inflation as too high, not because the economy is weak. Its statement described growth as solid, spending as resilient and business investment as robust, and officials now expect unemployment to hold around 4.1%. For many businesses that means steady demand alongside higher costs of money, a reason to borrow deliberately and for things that pay for themselves.

Sources: Federal Reserve FOMC statement and Summary of Economic Projections, September 16, 2026; U.S. Department of the Treasury daily yields. This article is general information, not financial advice.