Glossary · The loan itself
Federal Funds Effective Rate
In short
The interest rate at which depository institutions lend reserve balances to other depository institutions overnight. It's a key indicator of short-term interest rates.
What it means in a deal
While not directly used to set your 7(a) loan's variable rate (which uses WSJ Prime or Term SOFR), changes to the Federal Funds Effective Rate often influence these base rates. Monitor it to anticipate potential shifts in your loan payments.
Related terms
Common questions about Federal Funds Effective Rate
- What happens if a required personal guarantor lacks sufficient personal assets for an effective guaranty?
- What alternative base rates are available for variable-rate 7(a) loans besides the Wall Street Journal Prime rate?
- What is the 'Prime Rate' when talking about SBA 7(a) loan rates?
- What specific alternative base rates are permissible for variable rate 7(a) loans?
- What if a business applicant has outstanding federal tax liens or delinquencies?
- What if a borrower has outstanding judgments or liens from non-federal entities?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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