Finance term
Prime Rate
Also known as: WSJ Prime Rate, bank prime lending rate
Definition
The prime rate is the benchmark interest rate U.S. commercial banks charge their most creditworthy corporate customers — set at roughly the federal funds rate plus 3 percentage points. As of September 2026, the prime rate is 6.75%, unchanged since the Fed's June 17 and July 29, 2026 meetings. Most SMB loan APRs are priced as prime plus a spread of 2–8%.
Detailed explanation
The prime rate is published daily by the Federal Reserve in its H.15 Selected Interest Rates statistical release (https://www.federalreserve.gov/releases/h15/). When the Federal Open Market Committee (FOMC) raises or lowers the federal funds rate target, banks adjust the prime rate in lockstep — prime is mechanically set at FFR + ~3 percentage points. The Wall Street Journal surveys the 10 largest U.S. banks and publishes the consensus; if 7 of 10 change their rate, the WSJ Prime Rate updates.
For small business borrowers, the prime rate is the reference rate behind most floating-rate products. SBA 7(a) loans are priced at prime + 3.0%–6.5% depending on loan size and term. Business lines of credit at banks are typically prime + 1%–3% for strong files. Equipment financing often uses a fixed equivalent derived from the prime spread at origination.
The prime rate as of September 2026 is 6.75%, reflecting the FOMC's federal funds rate target of 3.50%–3.75%, held unchanged through its June 17 and July 29, 2026 meetings. A 6.75% prime rate means a prime + 3% SBA loan carries a 9.75% APR — still meaningfully higher than the pre-pandemic prime of 3.25% (2020–2022), when the same loan would have been 6.25%.
Prime-rate-indexed pricing directly shapes access, not just cost: the Federal Reserve's 2026 Report on Employer Firms found 22% of applicants for a loan, line of credit, or merchant cash advance received none of the financing they sought (https://www.fedsmallbusiness.org/reports/survey/2026/2026-report-on-employer-firms), and a higher prime environment tightens the DSCR math that determines who clears underwriting. The SBA's 7(a) and 504 programs, priced at prime + 3.0%-6.5% for many 7(a) loans, guaranteed 84,400 loans worth $44.8 billion combined in FY2025 (https://legacy.sba.gov/article/2025/09/30/trump-sba-delivers-record-capital-small-businesses-fy25) at those prime-indexed rates.
◈ Worked example
- Prime 6.75% + SBA 7(a) spread 3.0% = 9.75% APR on a $500K SBA loan
- Prime 6.75% + bank LOC spread 1.50% = 8.25% APR on a business line of credit
- Prime 6.75% + online lender spread 7.00% = 13.75% APR for a fair-credit term loan
Common questions
The most-asked questions about Prime Rate — answered straightforwardly.
Who sets the prime rate? +
The prime rate is set by individual banks but tracks the Federal Reserve's federal funds rate (FFR) mechanically — prime is approximately FFR + 3%. When the FOMC raises or cuts the FFR, every major bank adjusts prime within 24 hours. The Federal Reserve publishes the current rate in its H.15 release at federalreserve.gov/releases/h15/.
What is the prime rate right now (September 2026)? +
6.75% as of September 2026, corresponding to a federal funds rate target of 3.50%–3.75% held by the FOMC through its June 17 and July 29, 2026 meetings. The prime rate changes when the Fed changes the FFR — check the Federal Reserve H.15 release for the current figure.
Does the prime rate affect my variable-rate business loan? +
Yes. If your business loan, SBA loan, or line of credit is priced at prime + a margin, your rate moves with every Fed rate change. A 0.25% Fed cut reduces your payment on a $500K loan by roughly $1,250/year in interest. Floating-rate loans benefit from Fed cuts but cost more after Fed hikes.
Further reading
This glossary entry is educational content. ClearValue Lending is a business & personal financing platform — not a lender, broker, or financial advisor. Specific product terms vary by lender; verify with the lender or issuer before applying. See privacy policy.