At OBDC Small Business Finance, we work to keep our interest rates relatively close to what an entrepreneur could find with a bank. We do this by offering a rate calculated as WSJ Prime + 4%. Most folks don’t necessarily know what “WSJ Prime” is, so it’s hard to tell what this interest rate might be.
Forbes published a great article about what the new rate hike means for your wallet. In the first part of this article, you see that a rate increase from the Federal Reserve may influence the big banks to change their Prime rate. The Wall Street Journal (WSJ) surveys 30 major banks about their prime rate, and when 75% of them change, then the WSJ Prime rate changes. With the Fed increase that happened in December 2015, the WSJ Prime rate when up .25%, from 3.25% to 3.5%, which is where we are today.
When you see an advertised interest rate based on Prime, now you know how to calculate the total. #math
For more information about OBDC’s loans and services for small businesses, contact us.