The Fed has cut 175 basis points since September 2024, and just hit pause. After holding rates at the March 17-18 meeting, the Federal Funds target sits at 3.50%-3.75%, with Prime locked at 6.75% and SOFR at 3.68% on a quarter-end repo blip. For commercial borrowers, this is a decision window: rates are meaningfully lower than 18 months ago, but the path forward is data-dependent, not pre-committed. The next catalyst is the April 28-29 FOMC meeting.
| Prime Rate | 6.75% | Unchanged |
| SOFR | 3.68% | +5 bps (quarter-end) |
| Fed Funds Target | 3.50%-3.75% | Unchanged |
| Cycle Position | 175 bps cut from peak; paused since January 2026 | |
| Next Catalyst | FOMC April 28-29, 2026 | |
Bottom Line
- Rates are 175 basis points lower than the July 2023 peak, but the Fed is no longer cutting on a fixed schedule.
- Prime-linked borrowing costs have been flat since January. No movement expected before late April.
- This is a decision window, not a waiting game. The cost of inaction is known; the cost of waiting is not.
Key Takeaways
- The Fed has delivered 175 basis points of rate cuts since September 2024 but has now paused for two consecutive meetings, signaling that the easing cycle's pace is slowing even if the direction remains intact.
- SOFR's 5 bps jump to 3.68% on March 31 is a quarter-end funding artifact, not a monetary policy signal; the rate sat at 3.62%-3.65% for most of March.
- Prime Rate has been locked at 6.75% since the January 2026 cut, holding SBA 7(a) variable-rate maximums in a 9.75%-13.25% range depending on loan size.
- Monthly payments on a $500,000 SBA 7(a) loan at the current maximum rate for loans over $350,000 run $6,539/month over a 10-year term.
- The next potential rate catalyst is the April 28-29 FOMC meeting, with the Fed weighing cumulative easing effects against labor market strength and inflation readings from the first quarter.
Current Benchmark Rates
| Benchmark | Current Rate | 1-Week Change | 1-Month Change | Source |
|---|---|---|---|---|
| Bank Prime Loan Rate | 6.75% | 0 bps | 0 bps | Federal Reserve H.15 |
| SOFR | 3.68% | +5 bps | 0 bps | Federal Reserve Bank of New York |
| Fed Funds Target (upper) | 3.75% | 0 bps | 0 bps | Federal Reserve H.15 |
| Fed Funds Target (lower) | 3.50% | 0 bps | 0 bps | Federal Reserve H.15 |
Seven rate cuts over 16 months have moved the Federal Funds upper bound from 5.50% to 3.75%, with the Fed now pausing to assess the cumulative effect on credit conditions and inflation.
What Moved
The headline number this week is SOFR's 5 basis point rise to 3.68% on March 31. In isolation, a move from 3.63% to 3.68% looks like tightening. In context, it is calendar mechanics. Quarter-end dates routinely produce temporary upward pressure on overnight secured funding rates as banks window-dress balance sheets, reducing repo market lending capacity. SOFR spent most of March between 3.62% and 3.65%, a range consistent with the current Federal Funds target of 3.50%-3.75%. A move that would signal actual monetary-policy friction would be SOFR printing above 3.80% and holding there for multiple sessions, which would suggest overnight funding costs are pulling away from the policy corridor rather than bouncing within it.
Prime Rate, the anchor for most variable-rate commercial loans, has not moved since the Fed's January cut. Our explainer on how Prime Rate is determined details the mechanical link between the Fed Funds target and bank lending rates.
Where We Are in the Cycle
The Federal Reserve has cut rates by a cumulative 175 basis points from the cycle peak of 5.25%-5.50% reached in July 2023, bringing the target range to 3.50%-3.75%. That is roughly half of what a full easing cycle typically delivers. For reference, the 2019 mid-cycle adjustment totaled 75 bps; the 2007-2008 easing cycle delivered over 500 bps. The current pace sits between those two precedents, consistent with a Fed that views its policy rate as approaching but not yet at its terminal destination.
After cutting in January, the FOMC held at its March 17-18 meeting, choosing to assess how 175 bps of cumulative easing is filtering through to credit conditions. This pause matters for commercial borrowers because it suggests the rate trajectory relevant to financing strategy is no longer a steady descent but a staircase with uncertain step intervals. Variable-rate borrowers are sitting on rates that are 175 bps cheaper than they were 18 months ago, but further reductions are data-dependent rather than pre-committed. The question is no longer "how fast will rates fall" but "where does the Fed stop," and the answer depends on inflation readings and labor market data that have sent mixed signals through the first quarter.
Estimated Loan Rate Ranges
| Product | Rate Range | Basis | Notes |
|---|---|---|---|
| SBA 7(a) Variable | 9.75%-13.25% | Prime + 3.00% to 6.50% | Tiered by loan size per SOP 50 10 |
| Conventional Term Loan | 7.75%-9.75% | Prime + 1.0% to 3.0% | Credit profile dependent |
| Business Line of Credit | 7.75%-10.75% | Prime + 1.0% to 4.0% | Variable rate, revolving |
| Equipment Financing | 7.25%-10.75% | Fixed and variable | Collateral-secured |
| SBA 504 | 6.50%-7.50% | Blended CDC + bank | Real estate and equipment |
Borrower Implications
SBA 7(a) Variable-Rate Borrowers
SBA 7(a) spreads are not a single number; they are tiered by loan size under SOP 50 10. Loans over $350,000 carry a maximum spread of Prime + 3.00%, producing a ceiling of 9.75% at today's Prime. A $500,000 SBA 7(a) loan at that maximum rate on a 10-year term costs $6,539 per month. Borrowers in smaller tiers face steeper pricing: the $50,000-$250,000 tier maxes at Prime + 6.00% (12.75%), while loans under $50,000 can reach Prime + 6.50% (13.25%). The SBA 7(a) payment calculator can model specific scenarios across all tiers. For firms weighing timing: rates are stable through at least the April 28-29 FOMC decision. The cost of acting now is known; the cost of waiting depends on data the Fed has not yet seen.
Conventional and Line-of-Credit Borrowers
Conventional term loans are pricing in a 7.75%-9.75% range, with well-qualified borrowers at the lower end. A $250,000 conventional term loan at 8.75% (Prime + 2.00%) over a 5-year term runs $5,159 per month. Business lines of credit, which typically reprice monthly off Prime, are ranging from 7.75% to 10.75%. A $200,000 draw at 8.75% on an interest-only basis costs $1,458 per month. With Prime flat since January and the next FOMC decision four weeks away, variable-rate borrowers face a known-cost window through at least late April. Variable-rate borrowers are in a known-cost window through late April. For those considering fixed rates, the disconnect between Fed cuts and fixed-rate pricing is worth understanding before locking.
Fixed-Rate and SBA 504 Borrowers
Equipment financing and SBA 504 loans present a different calculus. Equipment lenders offer both fixed and variable structures, currently ranging from 7.25% to 10.75% depending on collateral quality and term. SBA 504 loans, which blend a CDC debenture with a bank portion, are running 6.50%-7.50%, among the most competitive rates in the commercial market. Firms evaluating SBA versus conventional channels should note that 504 rates reflect Treasury-indexed debenture pricing, which moves independently of Prime and has its own trajectory influenced by long-term yield expectations. The decision framework here is different: 504 and equipment rates track Treasuries, not Prime, so they may move independently of the next FOMC decision.
What to Watch
The April 28-29 FOMC meeting is the next scheduled rate decision. The statement language and any revised economic projections will carry as much weight as the rate decision itself. Between now and then, the data that could shift expectations include the March employment report (due early April), the March CPI release, and the Fed's Beige Book, all of which feed the committee's assessment of whether the economy is absorbing the cumulative 175 bps of easing as expected.
On the SOFR front, watch for the quarter-end print to normalize back below 3.66% in early April. If it does not, that could indicate genuine funding-market tightness worth monitoring. For a deeper view of rate benchmarks and historical context, the Business Loan Interest Rates data hub tracks these series continuously.
The next Weekly Borrowing Cost Snapshot publishes following the April 28-29 FOMC decision.