Quick answer for everyone waiting on the Fed before they fund anything: the market put a number on that wait this morning. Traders give the September 16 meeting a 52 percent chance of a quarter-point hike and 48 percent for no change. A cut prices below 1 percent. Not a typo!
Some history, because the phones are still running on last year’s script. The Fed cut three times at the end of 2025, September through December, then stopped cold. Zero cuts in 2026. The target range sits at 3.50 to 3.75, prime is 6.75 percent, unchanged since July, and rate markets lean toward one or two increases before the year is out.
So the useful question is which of your products even notices. Run it in dollars and most of the panic disappears.
What reprices if they hike
Anything floating. A variable line of credit is two numbers stapled together: an index, usually WSJ prime, plus your margin. The Fed moves the index. Your margin never moves. So a quarter-point hike on a line with $100,000 drawn costs $250 a year, about $21 a month. Carrying $40,000? That’s $100 a year. I’ve watched owners threaten to refinance a whole stack over that number, which is the tail wagging the dog.
A variable SBA 7(a) runs the same way, prime plus a lender spread. Current variable deals price between 9.75 and 13.25 percent depending on loan size. A quarter point on a $500,000 balance is $1,250 a year. Real money, worth knowing about in advance, and still the cheapest capital on the board by a mile.
Before September 16, pull your actual agreement and find four things:
- The index your rate rides on. WSJ prime for most lines, sometimes SOFR or the lender’s own base rate.
- The margin over it. The Fed never touches this part, and it’s where expensive lines hide.
- The reset schedule. Monthly, quarterly, or at your next draw. That’s the day a hike actually reaches your payment.
- A floor clause. If one is written in, your rate may not have followed the 2025 cuts down, but it will follow a hike up.
Ten minutes with the document beats a month of Fed coverage. If draws and resets are fuzzy territory, we broke down how a business line of credit actually works earlier this summer - the reset language is the part to reread this week.
What never notices
Everything fixed. The equipment loan you signed in June pays the same payment in October no matter what happens on the 16th. Same for a fixed-rate term loan, and the locked piece of a 504.
An advance sits outside this conversation entirely. A factor rate has no index to follow. It’s a fixed multiple, set the day you sign: $50,000 at a 1.24 repays $62,000, and no FOMC vote edits that figure. A hike will not grow it. The cut people keep waiting for would not have shrunk it. I walked through the full arithmetic in factor rates explained, but the September version is one line: your debit on the 17th is identical to your debit on the 15th.
Where the Fed does reach advance pricing is upstream and slow. Funders borrow too, and their cost of capital drifts with everyone else’s. That shows up in new offers over quarters. It does not show up in a signed contract overnight.
The one decision the meeting actually forces
Fixed versus floating on new money, this month. Signing a variable product in the next two weeks? Price it a quarter point higher on paper and check that the job still clears. If one quarter point breaks the deal, the margin was too thin before the Fed got involved.
And if you’re sitting on a fundable project waiting for cheaper money, look at what you’re betting on: an outcome priced below 1 percent this meeting, in a year where the expected direction is up. If the project pays at today’s rates, the meeting is noise. If it only pays at rates nobody is offering, it does not pay.
Tonight’s homework is one multiplication. Take every floating balance you carry and multiply by 0.0025. On most files I see, the answer lands between $100 and $1,500 a year. Put that next to what the money earns you, and September 16 gets a lot smaller.