As of September 17, 2025, the Federal Reserve lowered the federal funds rate by a quarter of a percentage. This is the first rate cut of the year.
What this may mean for SBA loans in 2025:
-
SBA 7(a) loans with variable interest tied to the base rate may become more favorable. As the Fed rate declines, lenders often adjust their variable components, which may lead to lower payments over time.
-
For fixed‐rate SBA options or loans locked in prior, existing interest costs remain the same—but new applications may benefit from the improved rate environment.
-
The drop in the prime lending rate (which typically follows Fed cuts) could make associated borrowing costs for small business loans more manageable.
If you’re considering financing soon, today’s rate cut could create a more attractive window. Even with the recent increases over the past several years, this move offers a modest easing. It’s a good time to review your borrowing plan, compare your options, and consider preparing your application.
Interest rate outlook for 2025
While additional cuts may follow if inflation continues to ease, uncertainty remains. Economic indicators are mixed, and the Fed has emphasized a data-dependent approach moving forward.
For small business owners, this means timing matters. If your business needs capital to grow, now may be an opportune moment to secure funding before rates change again. Waiting could lead to more favorable terms, but it could also mean missing out on current opportunities. As always, there’s no crystal ball, only smart preparation and strategic timing.
What are the signs of inflation?
As of September 2025, the U.S. inflation rate has eased to 3.4%, down from its post-pandemic peak of over 8% in 2022. This gradual decline reflects the Federal Reserve’s efforts to cool the economy through higher interest rates, efforts that are now giving way to a more neutral or even easing stance as inflation moderates.
Typical signs of inflation include:
-
Reduced purchasing power - consumers can buy less with the same amount of money
-
Higher interest rates and borrowing costs
-
Increased prices for everyday goods such as groceries, fuel, and utilities
-
Slower economic growth as consumers and businesses spend more cautiously
While inflation trends are cyclical, several long-term factors continue to influence price levels in 2025. These include global supply chain realignment, residual effects from the Russia-Ukraine conflict, and climate-related disruptions to agriculture and energy markets. Understanding these drivers can help small business owners make informed decisions about pricing, borrowing, and investment.
Impact on SBA loans
SBA loan borrowers may soon see modest relief, especially those with variable-rate SBA 7(a) loans. While the change won’t dramatically reduce monthly payments overnight, it signals a shift toward more favorable borrowing conditions.
For instance, on a $100,000 SBA loan, a 0.25% decrease in the Prime Rate could lower monthly payments by approximately $13.
This rate cut reinforces why SBA loans remain a smart option in fluctuating economic environments. Designed with long repayment terms, flexible use of proceeds, and no prepayment penalties, SBA loans help small business owners access affordable capital, even as rates move up or down. For those considering new financing, today’s shift could be a timely opportunity to lock in funding under improving conditions.
Are you ready for an SBA loan?
The right capital at the right time may help your business flourish, even in an uncertain economy. If you need working capital or want to refinance expensive debt, an SBA loan may be a great option.
SmartBiz® has helped more small business owners secure SBA loans than any other platform. We’ve streamlined the long, complicated application process. That means you save precious time during the application process. Check now whether you pre-qualify* for an SBA 7(a) loan.
If you’re interested in non-SBA financing, SmartBiz facilitates bank term loans with fixed rates, and other funding options like lines of credit.
Learn more about the popular SBA loan program on the SmartBiz blog.
