Oct 28, 2026

The article

The Federal Reserve didn't raise rates on Wednesday. If you run a business on a credit line, that's the good news, and it's about all the good news there is.

On October 28, the Federal Open Market Committee voted 10 to 2 to keep the federal funds rate in a range of 3.75% to 4%. The two dissenters, Governor Lisa Cook and Cleveland Fed President Beth Hammack, wanted another quarter-point increase. The statement was short and blunt. It described the economy as expanding at a strong pace and domestic spending as resilient, then delivered the line that matters most to anyone who borrows money: "Inflation remains elevated." The committee said it wants more information before deciding its next move.

This pause arrives six weeks after the Fed raised rates in September, its first increase since 2023. Big banks moved their prime rate from 6.75% to 7% the very next day. Consumer prices were up 3.7% in September from a year earlier, according to AP's reporting on the decision, and markets are pricing in another increase in December. At his press conference, Fed Chair Kevin Warsh said financial conditions have tightened since the September hike and described bringing inflation down as a gradual process. Translation: the Fed is waiting, not retreating.

Why a "hold" can still hurt

Most small-business credit isn't priced off the Fed directly. It's priced off the prime rate, plus a margin your lender picked when you signed. Lines of credit, many SBA 7(a) loans and most business credit cards float. When prime moved to 7% in September, that cost landed on your statement whether you noticed or not. Wednesday's decision locks it in for at least another six weeks, and two votes for a hike tell you which way the next move leans.

Run the math on a real number. Say you carry a $150,000 balance on a line priced at prime plus 2, which today means 9%. That's $13,500 a year in interest. Every extra quarter point adds $375. Two more hikes would add $750 before you sell a single extra unit. That's not a crisis for a healthy company. For a business with thin margins and a December inventory bill, it's a real tax on growth.

Owners already feel the squeeze. The NFIB Small Business Optimism Index slipped to 97.9 in September, a hair under its 52-year average, while its uncertainty gauge rose to 90, far above its historical norm of 68. Labor quality was the top problem, cited by 26% of owners, and inflation was second at 20%, against a long-run average of 7%. Add the energy price spikes tied to the Iran war and you get owners who are careful about hiring, careful about borrowing and very careful about guessing where rates go next.

Don't over-read one meeting

The Fed didn't promise a December hike. It said it wants more data, and Warsh declined to pre-commit. Rates could sit here for months, and it's possible the next move never comes. The smart response isn't a panic refinance or a cash hoard. It's making your business less sensitive to the price of money, so you don't need to predict the Fed to get through it.

That's a different mindset from "wait for cheaper money." Companies that grow only when credit is cheap are renting their growth. Companies that fund growth from customer cash, deposits and fast collections can keep moving whatever the committee decides.

What we know versus what we think

Relevance by growth stage

The revenue bands below follow Michael Masterson's four-stage model. They're a rule of thumb, not hard thresholds.

Three moves to make now

Map your floating debt this week. List every loan, line and card with its rate, index, margin and reset date. Calculate what a 0.25 and a 0.50 point increase costs you per year. If one balance dominates, ask your lender about fixing part of it or paying it down first.

Shorten the time cash spends trapped in your business. Ask for deposits on custom work, tighten terms on new invoices and stop buying inventory you can't sell inside your normal cycle. Every week you cut from your cash conversion cycle is a week you don't have to borrow.

Make idle cash earn its keep. Rates on cash tend to move slower than rates on debt, so check what your business account actually pays against other options your bank or accountant can offer. Get professional advice before moving anything.

Before December's Meeting

You have about six weeks until the Fed's next decision in December, so use them. Pull every statement, build the one-page debt map and run the quarter-point math before your holiday inventory orders go out. If the numbers make you wince, attack the most expensive balance first and fund growth with customer cash wherever you can. Owners who know their exposure can plan; owners who don't are just hoping. This article is general information, not financial advice, so talk to your banker or accountant about your own loans.