Fed Holds Interest Rates: What It Means for Business Loans

The Fed holds interest rates decision is in — and for small business borrowers it changes nothing, which is itself the news. On October 28, 2026, the Federal Open Market Committee kept the federal funds target range at 3.75%–4.00%, one month after raising it. If your loan or credit line is priced off the prime rate, September’s higher borrowing cost is still your cost today. Below: what the decision signals for December, what it does to loan pricing now, and the checks to run before the next meeting, December 8–9.

Fed holds interest rates October 2026: what the Fed decided on October 28

In its statement released at 2:00 p.m. EDT on October 28, the Fed said the Committee “decided to maintain the target range for the federal funds rate at 3-3/4 to 4 percent.” The vote was 10–2 — a divided committee, not a unanimous pause.

Two details in the wording matter more than the headline. The statement described economic activity as “expanding at a strong pace” — Reuters noted this upgraded September’s “solid” to “strong.” Second, it said “inflation remains elevated” and that the Committee wants more information before judging progress toward its 2 percent goal. September’s Consumer Price Index, the latest reading before the meeting, showed prices up 3.7% from a year earlier.

This hold came one meeting after the Fed raised the same range by a quarter point, at its September 15–16 meeting. A pause that follows a hike locks in the higher cost. It does not rewind it.

A hold is not a cut — and the dissents point the other way

If you were hoping this meeting would start bringing your rate down, read the vote split carefully. The two dissenters — Lisa D. Cook and Beth M. Hammack — were not arguing for a cut. Both preferred to raise the target range by another quarter point.

That does not make a December increase certain. It does mean the pressure inside the committee ran toward tighter policy, not looser. The next meeting, December 8–9, 2026, brings updated economic projections — the 2027 path gets spelled out there. Reuters reported on October 29 that market pricing put the odds of a December hike at roughly 78%. Treat that as a snapshot of trader expectations, not a promise; those odds move daily.

Budget for your current rate through year-end, and treat a December increase as a real possibility, not a remote one.

What this does to your loan and credit-line pricing

Most variable-rate small business loans and credit lines are priced as the prime rate plus a spread. Prime has stood at 7.00% since September 17, 2026, when it moved up after the Fed’s September hike. Because the Fed held in October, prime does not move, and your November statement is priced off the same benchmark as October’s.

So what are owners actually paying? NFIB survey data compiled in Newpoint Advisors’ October Distressed Business Index put the average rate on short-term small business loans at 8.2% in September, up from 7.5% in August — the September hike arriving in real loan payments. A hold means that level, not the summer level, is the baseline for any new quote this month.

SBA borrowers face the same math, with one offset. SBA caps variable rates at prime plus a set spread, so SBA pricing rose with prime in September and stays there. The offset: under the SBA’s FY2027 fee schedule, the upfront guaranty fee is waived through September 30, 2027, on 7(a) loans of $700,000 or less for manufacturers, specified food-supply-chain businesses, and rural businesses. If you are in one of those groups and planned to borrow anyway, that waiver is worth more than waiting on a rate move that may go the wrong way.

Buying a business with SBA debt also got harder on October 1, 2026: acquisition loans must now show debt-service coverage of at least 1.25x based on historical earnings only — projections no longer count.

Credit is still available — but the weak spots are showing

The same Newpoint index carries two findings worth holding together. On the supply side, the Federal Reserve’s Senior Loan Officer Opinion Survey showed 6.6% of banks, on net, still tightening standards for small firms, down from roughly 8% in the second quarter. Banks are not slamming the door; they are easing very slowly.

On the demand side, distress is climbing. Subchapter V small business bankruptcy elections reached 2,442 in the first nine months of 2026, up 46% from 1,672 in the same period of 2025, according to Epiq AACER data cited in the index.

The takeaway is not panic: lenders are open for business, but pricing is set by a benchmark that is not falling.

Refinance now, or wait for December 8–9?

This is the decision most owners actually face, and the answer depends on which side of the rate you sit on.

If you carry a variable-rate balance: waiting is a bet that December brings a cut. Nothing in the October statement supports that bet — the dissents wanted a hike, not a cut. If a fixed-rate refinance at a payment you can carry removes that risk, the value is certainty, not a lower headline rate. Run both payments side by side.

If you are about to borrow for a specific purchase: price the deal at today’s rates, not hoped-for December rates. If the purchase still pays for itself at prime plus your spread, a possible quarter-point move either way should not make or break it. Our guide to how to measure AI ROI applies the same discipline to technology spending: the return case must work at real prices, not optimistic ones.

If your purchase is discretionary: a defined cost helps you decide. The Square AI kiosk cost breakdown on this site prices a purchase in full — hardware, monthly fee, payback period — before signing anything. Do that math for your own purchase at an 8%-plus cost of funds, and the wait-or-act answer usually settles itself.

One caution: a fixed loan taken today locks in today’s higher environment, and prepayment terms decide what it costs to exit if rates fall later. Read them before you sign.

What to do this month: a checklist for owners

1. List every variable-rate balance you carry — loan, line of credit, business credit card — and note the spread over prime on each. That spread is your actual price of money.
2. Re-run your payments at prime +0.25 — if the Fed hikes in December, that is your January payment. Know the number before it arrives.
3. Ask your lender: “What would it cost to fix this rate, in total, including fees?” Get it in writing — a quote costs nothing and becomes your comparison point.
4. Check SBA eligibility before a bank term loan. If you are a manufacturer, food-supply-chain, or rural business borrowing $700,000 or less, ask your lender whether the FY2027 upfront-fee waiver applies to you.
5. If you are buying a business, rebuild your numbers on historicals: the 1.25x coverage test runs on past earnings only, and a deal that only works on projections will not clear underwriting.
6. Protect your receivables. With bankruptcies up 46% this year, a customer failing mid-invoice hurts more than a quarter point of interest. Follow up late invoices weekly, not monthly.
7. Calendar December 8–9, and revisit these decisions that week, when the Fed publishes fresh 2027 projections.

The bottom line

The Fed held rates at 3.75%–4.00% on October 28, so September’s higher borrowing costs stay in place — prime at 7.00%, average short-term loan rates around 8.2%, and a committee whose only dissenters wanted to go higher. Borrow at today’s prices, check the SBA fee waiver if you qualify, and have your December answer ready before December arrives.

This article is general information, not financial advice for your business. Loan decisions depend on your cash flow and lender — talk to your accountant or lender before refinancing or borrowing. See our Disclaimer page.

Frequently Asked Questions

Sources

• Federal Reserve, FOMC statement (October 28, 2026)
• Reuters, “FOMC holds rates steady, markets mostly follow suit” (October 28, 2026)
• Reuters, “Dollar steady after Fed hold leaves rate path murky” (October 29, 2026)
• Newpoint Advisors, Distressed Business Index — October 2026 (NFIB loan rates, bank lending survey, Subchapter V data)
• PBS Brokers, “Current SBA 7(a) Loan Trends & New Rules” (WSJ prime rate 7.00% effective September 17, 2026)
• MarketDaily, “SBA Loan Rules Change Under SOP 50 10 8.1 as New Acquisition Standards and FY2027 Fees Take Effect October 1” (FY2027 upfront guaranty fee waiver, citing SBA Information Notice 5000-881797)
• Polsky Center, University of Chicago, “What the October 1 SBA Changes Mean for Searchers” (October 21, 2026 — acquisition coverage test, 1.25x on historical earnings)