Commercial Loan Rates in 2026

Commercial Loan Rates in 2026: Where Things Stand

Interest rates are the single biggest variable cost in any commercial loan. A half-point difference on a $1 million loan translates to $5,000 per year in additional interest -- compounding over a 10 or 25-year term, that is real money. This guide covers where rates are today, what is driving them, and what you can do to lock the best rate for your deal.

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Rate Benchmarks (As of May 2026)

Every commercial loan rate is built on top of a benchmark. Here are the benchmarks that matter:

Sources: Federal Reserve H.15 Statistical Release, FRED (Federal Reserve Bank of St. Louis) Why these benchmarks matter: Your loan rate = benchmark + lender spread. The benchmark is market-driven (you cannot negotiate it). The spread is lender-driven (you can negotiate it, and it varies significantly by lender, loan type, and borrower profile).

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Rates by Product Type (May 2026)

### Rate Ranges Explained

The wide ranges above reflect the reality that commercial lending is not one-size-fits-all. Your actual rate depends on:

• Loan-to-value (LTV): Lower LTV = lower rate. A 60% LTV deal gets a better rate than an 80% LTV deal.
• Debt service coverage (DSCR): Stronger cash flow = lower rate. A 1.50x DSCR borrower gets better terms than a 1.25x borrower.
• Property / business type: Multifamily and medical office are viewed as lower risk than retail or hospitality.
• Borrower credit: 720+ FICO opens the best conventional rates. Below 680 pushes you toward SBA or alternative lenders.
• Loan size: Larger loans (above $1M) often get tighter spreads due to lender economics.

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What Is Driving Rates in 2026

The Federal Reserve: On Pause

The Federal Reserve held the federal funds rate steady at 3.50-3.75% at its most recent meeting (April 29-30, 2026). After a series of cuts in late 2024 and 2025 that brought rates down from the 5.25-5.50% peak, the Fed has paused to assess the cumulative impact of easing.

Key factors in the Fed's calculus:

• Inflation: Core PCE remains above the 2% target, hovering around 2.6-2.8%. The Fed has signaled it will not cut further until inflation shows a sustained path toward 2%.
• Employment: The labor market remains solid with unemployment near historical lows. This gives the Fed room to wait.
• Trade policy uncertainty: Tariff developments have introduced new inflation risk, making the Fed more cautious about premature easing.

The Inflation Wildcard

Inflation is the variable that determines whether 2026 sees another rate cut or a prolonged pause. If tariff impacts push consumer prices higher, the Fed may hold at current levels through year-end. If inflation cools toward 2%, the door opens for a cut in Q4.

For borrowers, this means: do not wait for dramatically lower rates. The current environment is meaningfully better than 2023-2024, and further improvement is uncertain.

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Rate Trends Year-to-Date (2026)

Rates have been relatively stable through the first half of 2026 after the easing cycle of 2024-2025:

The trend is clear: rates came down significantly from the 2023-2024 peak but have leveled off. The 10-year Treasury has been range-bound between 4.20% and 4.60%, which keeps fixed-rate commercial products relatively stable.

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How to Lock the Best Rate

Tip 1: Improve Your DSCR Before Applying

Lenders price risk, and DSCR is the primary risk metric. Actions that improve your DSCR before you apply:

• Reduce existing debt (pay down credit lines)
• Increase NOI (raise rents to market, reduce operating expenses)
• Structure the deal to reduce total debt service (longer term, larger down payment)

A borrower with 1.50x DSCR will get a meaningfully better spread than one with 1.25x.

Tip 2: Shop Multiple Lenders

Commercial loan rates vary more between lenders than most borrowers realize. A difference of 50-100 basis points on the spread is common. Get quotes from at least 3-4 lenders, including at least one SBA Preferred Lender, one conventional bank, and one non-bank lender.

Tip 3: Consider Rate Lock Timing

For fixed-rate products (SBA 504, conventional fixed, CMBS), rates are locked at different points in the process:

• SBA 504: Rate is set at debenture sale (monthly, tied to 10yr Treasury at that time)
• Conventional fixed: Rate lock is typically available at commitment, with a 30-60 day lock period
• CMBS: Rate lock at application or commitment, depending on the lender

If you believe rates may rise in the near term, locking early (even at a small cost) can save significant money over the loan term.

Tip 4: Negotiate the Spread, Not the Benchmark

You cannot negotiate the prime rate or the 10-year Treasury. You can negotiate the lender's spread above the benchmark. Focus your negotiation on:

• Origination fee (points)
• Spread above benchmark
• Rate floor provisions (for variable rates)
• Prepayment penalty structure

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Rate Forecast: Rest of 2026

Based on Fed communications, market pricing, and economic indicators:

• Most likely scenario: The Fed holds at 3.50-3.75% through Q3 2026, with one 25-basis-point cut projected in Q4 2026 if inflation cooperates. This would bring the fed funds rate to 3.25-3.50% and prime to 6.50%.
• Bull case: Inflation drops faster than expected; the Fed delivers two cuts in H2 2026, bringing rates to 3.00-3.25%.
• Bear case: Tariff-driven inflation re-accelerates; the Fed holds at current levels through year-end or beyond.

Practical implication: If you have a deal that works at today's rates, do the deal. Waiting for a rate that may or may not come in Q4 means months of lost revenue from the business or property you are not yet operating.

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Key Takeaways

1. Rates are significantly lower than the 2023-2024 peak but have plateaued in early 2026. The easy gains from Fed easing are behind us.
2. SBA 504 remains the lowest fixed-rate option for owner-occupied commercial real estate, with CDC portion rates around 5.85-6.50%.
3. SBA 7(a) variable rates are more attractive than a year ago but still run 9-13% depending on loan size and credit profile.
4. One more Fed cut is the consensus for late 2026, but it is not guaranteed. Do not build your deal around a rate cut that may not happen.
5. The spread is where you have negotiating leverage. Shop multiple lenders and negotiate the margin above the benchmark.

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Frequently Asked Questions

1. What is a good commercial loan rate right now?

It depends on the product. For SBA 504 (fixed, real estate), 5.85-6.50% is competitive. For SBA 7(a) (variable), under 10% is good for most borrowers. For conventional commercial mortgages, 5.50-6.50% fixed is the sweet spot for strong credits.

2. Will commercial loan rates go down in 2026?

Possibly. The market is pricing in one 25bp cut in Q4 2026, which would lower Prime by the same amount. However, this depends on inflation data. Fixed rates (tied to the 10yr Treasury) could move independently of Fed action.

3. Should I lock a rate now or wait?

If your deal works at today's rates, lock it. Rate timing is speculation, and the opportunity cost of waiting (lost revenue, rising property prices, deal falling through) usually outweighs the potential savings from a 25bp cut.

4. How do SBA rates compare to conventional rates?

SBA 7(a) variable rates are typically higher than conventional fixed rates (9-13% vs. 5.50-7.00%), but SBA offers lower down payments, longer terms, and more flexible underwriting. SBA 504 fixed rates are competitive with or lower than conventional for real estate.

5. What credit score gets the best commercial loan rate?

720+ FICO opens the best conventional rates. 680+ is the threshold for most SBA lenders. Below 680, expect higher spreads or alternative lender pricing.

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See the latest rates for your specific deal type on our rates page. Ready to apply? Submit your deal and get matched with lenders competing for your business.