Prime was 6.75% on August 18, 2026, per the Federal Reserve's H.15 release. Banks post that number; the Fed does not set it. What it costs you depends on two things your loan documents already answer — the spread added to prime, and the date your rate is allowed to reset.
Who actually sets the prime rate?
Not the Federal Reserve. FRED, the St. Louis Fed's public data service, describes the bank prime loan series as a rate "posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered commercial banks," and notes that "Prime is one of several base rates used by banks to price short-term business loans." The Fed collects and publishes the figure. Banks decide it.
Fed policy still drives it. The Federal Open Market Committee held the federal funds target range at 3.50% to 3.75% on July 29, 2026, with three members dissenting in favor of a quarter-point increase. The posted prime rate sits exactly three percentage points above the top of that range. The Fed's H.15 release, dated August 19, 2026, put the bank prime loan rate at 6.75% and the federal funds effective rate — what banks actually paid each other for overnight money — at 3.63%, both as of August 18, 2026.
That three-point gap is a posting convention among large banks, not a Fed rule and not a promise to anyone. Which is why the headline number on its own tells an operator very little. The question that reaches your ledger is narrower: prime plus what, resetting when.
What does "prime plus a spread" actually cost?
Add the spread to the base rate, and on an SBA 7(a) loan the spread is capped by loan size. SBA publishes maximum allowable spreads over the base rate for variable-rate 7(a) loans. At a 6.75% prime, those caps translate into the ceilings below. They are ceilings, not quotes.
| Loan amount | Maximum spread over base rate | Ceiling at 6.75% prime |
|---|---|---|
| $50,000 or less | 6.5 percentage points | 13.25% |
| $50,001 to $250,000 | 6.0 percentage points | 12.75% |
| $250,001 to $350,000 | 4.5 percentage points | 11.25% |
| Greater than $350,000 | 3.0 percentage points | 9.75% |
Read that as a range of permitted outcomes rather than a menu. The smallest loans carry the widest allowable spread, so the base rate is a smaller share of the total price on a $40,000 note than on a $1 million one — on the larger loan, prime is most of the rate. A quarter-point move in the base rate still lands on the full outstanding balance either way. The spread caps above were checked on August 20, 2026; a lender may charge less than the maximum, and many do.
Is prime the only base rate your lender can use?
No, and the menu widened this year. SBA permits five base rate options for variable-rate 7(a) loans: the prime rate, the optional peg rate, the 5-year Treasury note rate, the 10-year Treasury note rate, and SOFR. The three alternatives took effect March 1, 2026, and remain in effect until further notice.
The practical difference is timing, not generosity. The Federal Register notice states that the Treasury-based rates "will be adjusted monthly and based on the market rate at 5:00 p.m. Eastern on the final business day of the previous month." A prime-based loan can reprice as soon as banks move their posted rate following an FOMC decision. A Treasury-based one waits for the calendar to turn. Same lender, same borrower, different reset mechanics — and a different month in which the payment changes.
Check which base rate your note names. It is a line in the loan agreement, not a matter of interpretation.
When does a rate move actually hit your payment?
On your reset date, not on the announcement date. A variable-rate loan that adjusts quarterly picks up a rate change at its next scheduled adjustment, and the recalculated payment appears on the billing cycle after that. Fixed-rate debt does not move at all until you refinance it.
Three dates matter here, and they are rarely the same day: the FOMC decision date, your loan's rate adjustment date, and the first payment computed at the new rate. The first is published. The second and third are in your paperwork. Find the reset date. Then call your lender and confirm it.
One more line worth locating: any floor or ceiling written into the note. A floor can make a downward move in the base rate irrelevant to what you pay, which is a detail operators discover late and rarely enjoy.
What if your bank has not moved on pricing at all?
That is common, and it is not the Fed's doing. In the Federal Reserve's July 2026 Senior Loan Officer Opinion Survey, banks reported standards on commercial and industrial loans to small firms — those with annual sales under $50 million — as basically unchanged in the second quarter of 2026, with demand from small firms also basically unchanged. A modest net share of foreign banks reported tightening.
The same survey found banks easing the costs of credit lines to small firms. Standards and pricing are separate levers: a bank can hold its underwriting bar steady while trimming what it charges on a line of credit. That survey collected responses from 56 domestic banks and 18 U.S. branches of foreign banks between June 17 and July 2, 2026. It describes what banks reported in aggregate, and says nothing about what any individual lender will quote a particular business.
What should you pull from your own file?
Five items, and all of them are in documents you already have. This is a records exercise, not a market call — the base rate is public, but everything that converts it into your payment is private to your agreement.
- The base rate your note names: prime, the optional peg rate, a Treasury rate, or SOFR.
- The spread, stated in percentage points, separately from the all-in rate.
- The adjustment frequency and the exact next reset date.
- Any rate floor or ceiling.
- Whether each loan is fixed or variable — per loan, not per lender. Many operators carry both and remember only one.
Then run the arithmetic against the balance you owe today, not the amount you originally borrowed. Working capital — the cash that covers the gap between paying suppliers and getting paid — is where a repricing shows up first, because a line of credit typically resets faster than a term loan.
The limits of the number
This is information, not financial advice. Borrowing terms differ by lender, by loan and by borrower, and every figure above is either a published reference rate or a published program maximum as of the date named — not a quote anyone can rely on. Nothing here forecasts where rates go next. Rate forecasts belong to the institutions that publish them, with dates attached, and this piece does not make one.
For more context, read Prime Rate Holds at 6.75% After the Fed's Split Decision.