December 21, 2022
C-Suite Wednesday – Highest SBA Interest Rates in 15 Years
After the Federal Reserve’s rate raised interest rates by 50 basis points last week, SBA loans will have interest rates in the double digits for the first time since 2007. The prime rate was at 3.25% for two straight years until mid-March 2022, and since the initial increase in March, the Federal Reserve has made six additional rate hikes. Over the course of nine months, the prime rate doubled and is now at 7.5%. Interest rates are expected to continue rising during 2023 and will be elevated for an extended period.
Under the 7(a) loan program, maximum fixed rates range from 12.5% to 15.5% depending on the dollar amount. For variable interest rate loans, maximum rates range from 10.5% to 14%.
Last week, the Labor Department reported that the Consumer Price Index increased just 0.1% in November, a lower rate than expected, and increased 7.1% from last year. This suggests that inflation could be slowing down.
“Cooling inflation will boost the markets and take pressure off the Fed for raising rates, but most importantly, this spells real relief starting for Americans whose finances have been punished by higher prices,” says Robert Frick, Corporate Economist with Navy Federal Credit Union.