The Prime Rate, As of the Most Recent Fed Release
The Bank Prime Loan Rate stood at 6.75%, effective and unchanged across the week of August 7 to 13, 2026, the most recent full week reflected in the Federal Reserve Board’s own H.15 Selected Interest Rates release. Prime is one of several base rates banks use to price short-term business loans, a widely referenced benchmark for traditional bank lending specifically.
A merchant weighing a traditional bank line of credit or term loan against an MCA offer is, in effect, weighing that 6.75% benchmark, plus whatever spread the bank adds for that merchant’s specific credit profile, against whatever an MCA funder is quoting as a factor rate.
Why a Factor Rate Cannot Just Be Compared to Prime
MCA factor rates commonly range from 1.1 to 1.5, a one-time decimal multiplier applied once to the funded amount, not an annualized percentage that accrues over time the way prime does. A factor rate of 1.3 on a $50,000 advance means $65,000 total is owed, a fixed number set at funding, regardless of how quickly or slowly that amount is repaid.
That structural difference, a one-time multiplier versus an annualized rate, is why a factor rate and the prime rate cannot simply be placed side by side as two comparable numbers. They measure fundamentally different things, and a direct comparison without conversion produces a misleading spread.
How the Conversion Works
Converting a factor rate into a comparable figure requires translating it into an effective APR using the advance’s actual term length, since the same 1.3 factor rate represents a much higher effective annualized cost on a four-month advance than it does on a twelve-month advance. The total dollar cost is fixed, but the time period it is spread across changes what that cost represents on an annualized basis.
Only after that conversion does a genuinely comparable number exist to place against the 6.75% prime rate above. Presenting a bare factor rate range next to prime without that conversion step, common in informal comparisons, is exactly the kind of framing that produces a misleading spread rather than an accurate one.
Why This Math Exercise Became a Compliance Requirement
This conversion is no longer just a useful exercise for anyone trying to make sense of the two products, it is now an active compliance requirement in at least one state. California’s SB 362, effective January 1, 2026, requires that once a specific commercial financing offer is made, any subsequent communication stating pricing, a fee, or a financing amount must simultaneously disclose the Annual Percentage Rate, and using “rate” or “interest” language to describe non-APR pricing can itself be treated as deceptive.
That means the factor-rate-to-APR conversion this piece describes is precisely the calculation a broker communicating with a California-based merchant now has to run and disclose, not an optional comparison for the curious.
What the Spread Represents Once Converted
Once converted to an effective APR basis, the resulting spread between a given MCA offer and the 6.75% prime rate reflects several real factors at once: MCA’s faster approval timeline, its cash-flow-based rather than credit-history-based underwriting, and the funder’s own pricing for the additional risk of extending capital without the collateral and credit-depth requirements a bank loan typically carries. None of that is captured by comparing a bare factor rate to a bare prime rate without the conversion step.
This piece deliberately does not present a single universal converted spread figure, since the actual effective APR of any specific MCA offer depends on its own stated term, which varies deal by deal, not on a fixed industry-wide number.
Reading This Alongside the Rest of the Rate Environment
Prime’s 6.75% level, unchanged across the most recent full week measured, sits inside a broader rate environment also covered by this document’s own Federal Reserve statistics: the Senior Loan Officer Opinion Survey, which measures whether banks are tightening or loosening the standards they apply around that same base rate, a related but distinct question from the rate level itself. A merchant’s actual bank-loan cost depends on both the rate and the standards a bank applies before offering it, not the rate alone.
Read together, a stable prime rate and lending standards reported as “basically unchanged” describe a rate environment that has not moved sharply in either direction recently, useful context for framing how an MCA offer’s effective cost compares to the traditional-lending alternative a merchant is weighing it against.
The Numbers
The Bank Prime Loan Rate stood at 6.75%, effective and unchanged across the week of August 7 to 13, 2026.
MCA factor rates commonly range from 1.1 to 1.5 as a one-time multiplier on the funded amount.
California’s SB 362, effective January 1, 2026, requires APR-equivalent disclosure on qualifying commercial financing offers, making factor-rate-to-APR conversion a compliance requirement.
Cloudsquare, California SB 362: New APR Disclosure Requirements for Brokers and Lenders
Sources
The external data in this article draws on the sources below. Figures described in the text as estimates or industry triangulations are directional and are not attributed to a single dataset.
- Federal Reserve Board, H.15 Selected Interest Rates release
- Swish Funding, Can You Pay Off a Merchant Advance Early?
- Cloudsquare, California SB 362: New APR Disclosure Requirements for Brokers and Lenders