On September 16 the Federal Reserve raised the federal funds rate by a quarter point to a range of 3.75 to 4.00 percent. Banks moved the prime rate to 7.00 percent the next morning, up from the 6.75 percent that had held since December. It was the first increase since 2023, and the committee's own projections left the door open to more before the year is out.
We got calls about it the same week, from both sides. Sellers wanted to know whether this costs them money. Buyers wanted to know whether they should move faster or wait. Both are fair questions, and the honest answer to each one is more specific than the headline suggests.
Here is what actually changes for a business sale in Lee and Collier County, with the arithmetic laid out so you can run it against your own numbers.
How an Interest Rate Becomes Your Sale Price
Most small business sales in Southwest Florida are financed with an SBA 7(a) loan. That loan is not priced off a mortgage index or a treasury yield. It is priced off prime plus a lender spread, and on acquisition deals in our market that spread usually runs somewhere around two to three points. So when prime went from 6.75 to 7.00, every variable rate 7(a) quote in the country went up a quarter point along with it.
That matters because of the way lenders decide how much they will lend. The number that governs the deal is debt service coverage. The lender takes the earnings of the business, subtracts a reasonable salary for the buyer who now has to live on it, and then requires that what remains covers the annual loan payment by a set margin. Historically many lenders worked to 1.15 times. Under the rules taking effect on October 1, the floor becomes 1.25 times, and it has to be met on historical earnings rather than projections.
Run that backward and you have the real mechanism. Your earnings and the coverage ratio set the maximum annual payment. The interest rate and the term set how much loan that payment buys. The loan plus the down payment sets the price. Rates do not change what your business is worth in theory. They change what a financed buyer is physically able to pay for it.
The Short Version
A quarter point, by itself, is not what moves a deal. It costs a typical buyer somewhere in the neighborhood of one percent of purchasing power. What matters is the direction of travel combined with the tighter coverage requirement arriving October 1. Those two together are worth paying attention to. Either one alone is not.
The Math on a Real Deal
Take a service business doing $400,000 in seller's discretionary earnings, which is a common size for what trades here. A buyer replacing the owner needs a salary, so call that $120,000. That leaves $280,000 available to service debt. At a 1.25 coverage requirement, the maximum annual loan payment the lender will allow is $224,000, or about $18,667 a month.
Now apply a ten year amortization at each rate, assume a 90 percent advance, and see what that payment buys.
| Prime rate | Loan rate at prime plus 2.5 | Maximum loan | Supportable price |
|---|---|---|---|
| 6.75% (before September 16) | 9.25% | About $1,458,000 | About $1,620,000 |
| 7.00% (today) | 9.50% | About $1,443,000 | About $1,603,000 |
| 7.50% (if two more increases land) | 10.00% | About $1,412,000 | About $1,569,000 |
The quarter point that just happened cost that seller about $17,000 on a $1.6 million business. That is real, but nobody walks away from a deal over it. If prime ends up at 7.50 percent, the gap from where we started is closer to $50,000, or roughly three percent. Still not catastrophic, and still smaller than the swing you get from one customer concentration problem showing up in diligence.
The point of running the numbers is not to alarm anyone. It is to stop the conversation where a seller assumes a rate move erased a quarter of their value, and to stop the one where a buyer uses a Fed headline to justify an offer that is well below what the change actually costs.
October 1 Is the Bigger Story
The rate change got the news coverage. The rule change did not, and it will matter more to most owners reading this.
Beginning October 1, SBA acquisition lending tightens in several ways at once. The 1.25 coverage floor described above has to be satisfied on historical results, so a strong forecast no longer bridges a weak trailing year. Acquisitions with a business purchase price of $3 million or more require a lender commissioned quality of earnings report, paid for by the buyer, and the resulting earnings figure is the one the lender must use. Seller notes on full standby extend to thirty six months, and an interest only seller note now gets imputed as though it amortized over ten years for coverage purposes.
Stack that on top of a higher prime and you get a market where the quality and clarity of your financial records has more effect on your price than the Fed does. We have written separately about those rule changes in more detail, and the link is below.
If You Are Thinking About Selling
Nothing here argues for panic selling, and nothing here argues for waiting either. What it argues for is getting ready properly, because preparation is worth several times more than timing.
- Know your own coverage number before a buyer does. Take your adjusted earnings, subtract a realistic owner salary, divide by 1.25, and you have the annual debt service your business will support. That tells you your likely price range faster than any rule of thumb multiple.
- Clean up the add backs now. Every dollar of earnings a lender will not accept costs you several dollars of price at these coverage levels. Personal expenses run through the business are worth far more to you documented than undocumented.
- Expect seller financing to come up more often. When bank capacity tightens, a seller note is frequently what closes the gap between your number and the buyer's approval. It is not a concession. It is a tool, and it is often the difference between a full price deal and no deal.
- If your business is near $3 million, plan for the earnings review. Going to market with financials that will survive an outside accountant's examination is no longer optional at that size.
- Do not price off last year's comparable sale. A business that sold at a given multiple in early 2026 was financed at a lower rate under looser coverage rules. That comparable has quietly gotten more expensive to repeat.
If You Are Thinking About Buying
Higher rates cut both ways, and the second effect usually gets less attention than the first.
Your monthly payment on any given price went up, which is the obvious part. Less obvious is that everybody else's did too. Rate increases thin out the buyer pool, particularly the marginal buyers who were stretching to qualify in the first place. Competition for good businesses here has been the single biggest driver of price for the past two years. Less competition is worth something to whoever is still standing.
Two practical notes. First, get a real pre qualification rather than a friendly conversation, and get it now, because the loan you were verbally approved for in July is not the loan you qualify for in October. Second, ask your lender directly whether they are quoting variable or fixed. Fixed rate 7(a) pricing exists, it is allowed to run higher than variable, and in a rising environment it is worth a comparison instead of an assumption.
What We Would Do in the Next Ninety Days
If you are an owner in Naples, Fort Myers, Cape Coral, Bonita Springs or anywhere else in this region and a sale is somewhere on your horizon, three things are worth doing before the end of the year.
- Get a current valuation that is built from your actual financials, not a multiple applied to a rounded number. Your price range moved this month whether you looked at it or not.
- Have a conversation with a lender who does SBA acquisition work in this market, about your specific business, so you know what a buyer is going to be told about it.
- Fix the one thing in your records that you already know is going to be a problem. Every owner has one. It is cheaper to handle in September than in diligence.
After nearly a decade selling businesses in Southwest Florida, the pattern holds through every rate environment we have worked in. Rates move the price at the margin. Preparation moves it far more, and it is the part you control.
Want to Know What This Means for Your Business?
Let's run your actual numbers against current lending terms and see what a buyer can realistically pay right now. No obligation, and the conversation stays confidential.
Schedule a Consultation Value My BusinessThis article reflects rate and program information as of September 21, 2026. The prime rate and SBA program rules change, lender spreads vary by institution and by deal, and the loan and price figures above are illustrative calculations rather than quotes or appraisals. Actual terms depend on the business, the buyer, the lender and the structure. This is not legal, financial, tax or investment advice. Consult your own attorney, accountant and lender before making decisions about a purchase or sale.