September 3, 2025

Do Interest Rates Really Matter? | LoL #13

Shane Pierson, Stephanie Dunn & Brian Congelliere

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Do Interest Rates Really Matter? — Key Takeaways & Deep Dive

If you are a small business owner sitting on the sidelines waiting for the Fed to cut rates before making your next move, you are probably costing yourself more than you think. In Episode 13 of Lords of Lending, Shane Pearson, Stephanie Dunn, and Brian Congelliere break down the real math behind SBA interest rates and why chasing a quarter-point cut is one of the most expensive mistakes an entrepreneur can make.

In this episode: The Lords tackle the question every business owner and buyer is asking: should I wait for cheaper money or move now? Stephanie challenges the fragility mindset that lets a single metric dictate business survival. Brian runs the actual numbers on what a 25 basis point cut means for a million-dollar loan (spoiler: about $140 a month). And Shane drives it home with a metaphor that sticks — waiting for a rate cut is like sitting at a green light, watching the gas station price, while traffic blows past you.

Key Takeaways

1. A 25 Basis Point Cut Saves You Less Than You Think

The media treats every Fed announcement like an economic earthquake. Cable news runs countdown clocks. Stock tickers go haywire. But when you strip away the noise and look at the actual numbers, the impact on a small business loan is shockingly small.

Shane posed the question directly to Brian during the episode: what does a 25 basis point cut actually do to a million-dollar SBA loan? The answer? On a 10-year term, the monthly payment difference is roughly $140. On a 25-year term, it is even less.

That is the number that business owners are freezing their growth plans over. Not thousands. Not even five hundred. About $140 a month — less than most cell phone bills.

"If you're chasing a quarter point interest rate at this point, you're chasing $150. Is that worth waiting, or can you get out and go make two sales and make up that income just by making a phone call?" — Shane Pearson, Lords of Lending Episode #13

Brian reinforced this by pointing out that most SBA loans are tied to a variable rate based on the Wall Street Journal Prime. That means even if you close your loan today at a slightly higher rate, you will automatically benefit when rates drop. You do not need to time the market perfectly — the product is already built to adjust.

For borrowers looking at fixed-rate options, Brian acknowledged that locking in now versus waiting could mean a slightly higher rate. But "slightly higher" in this context means maybe $500-700 a month on a 10-year note at a full 4 percentage points difference — and nobody credible is predicting a 4-point drop anytime soon. The realistic difference between acting now and acting in a year is measured in hundreds of dollars, not thousands.

2. Your Business Should Never Live or Die by One Metric

Stephanie opened the episode with a principle that every business owner should tape to their bathroom mirror: if your business is so fragile that one factor — whether that is interest rates, labor costs, or inventory prices — can put you under, you have a more fundamental problem than the Fed can solve.

This is about resilience, not rates. A business that crumbles because of a 1-2% rate shift was already on shaky ground. Steph's advice is to look hard at your debt-to-net-worth ratio, stress-test your model against both high-rate and low-rate environments, and make sure you have the capital reserves to absorb shocks.

"If you're so fragile that one of the metrics in your business can put you out of business, you as a business owner and as a human being, everyone should be nimble. Everyone should operate with the ability to evolve and pivot." — Stephanie Dunn, Lords of Lending Episode #13

She also raised a provocative question that could be its own episode: are we overpaying for everything? Her theory is that business valuations over the last five years have been inflated, and the pressure entrepreneurs feel is not just from interest rates — it is from overpaying for acquisitions that were never priced correctly in the first place. When you combine an inflated purchase price with a higher interest rate, the math gets ugly fast. But the fix is not to wait for rates to drop — it is to stop overpaying and find deals that are priced fairly based on actual cash flow, not bubble-era comps.

Steph's practical advice for entrepreneurs considering a startup: tread lightly. Bootstrap it. Keep your debt-to-net-worth ratio well under one. Have cash in the bank before you borrow. She has seen too many applications from aspiring business owners who want to start a company but have nothing in savings. Within 12 months, those people are chasing MCA debt and high-interest credit card balances just to cover operating capital. The interest rate on the SBA loan was never the problem — the lack of preparation was.

3. Delay Is the Most Expensive Line Item That Never Shows Up on Your P&L

Shane's green light metaphor captured the entire episode in a single image. You are sitting at an intersection. The light is green. Traffic is flowing. But you will not take your foot off the brake because the gas station on the corner has not dropped its price by three cents yet. Meanwhile, everyone else is driving past you and getting where they need to go.

The cost of waiting is invisible but real. It is the equipment you did not buy that would have increased output. It is the acquisition you passed on that someone else grabbed. It is the six months of revenue you never earned because you were "waiting for the right time."

Shane was honest about his own bias here — he is someone who moves fast and sometimes has to clean up collateral damage afterward. But he makes a strong case that in business, the ability to execute on a decision, even an imperfect one, can be a superpower.

"Delay is one of the most expensive line items that really doesn't show up on a P&L. I don't like how people just wait for the sake of waiting." — Shane Pearson, Lords of Lending Episode #13

Brian tied this back to the test-and-fail-fast mentality. Instead of paralysis, run experiments. Raise prices on five items for two weeks and see what happens. Test a marketing channel with a small budget. Make a phone call instead of sending another email. Get data, adjust, repeat.

Brian also pointed to a pattern in the default data that supports this mindset. His hunch — backed by what he has seen across hundreds of loan files — is that a large portion of SBA loan defaults come from two categories: startups that never figured out their money-making mechanisms before taking on debt, and existing businesses that were already struggling from Covid-era damage and layered more borrowing on top without a clear plan for how to deploy that capital. In neither case was the interest rate the deciding factor. It was preparation, execution, and operational discipline that determined whether the loan performed.

Shane summed it up perfectly: do not use the stock market or interest rates to govern how your day-to-day business runs. The stock market's volatility is being driven by algorithms that play on people's emotions, not by fundamental changes in how your corner of the economy works. Figure out what your pulse looks like. Work on your business instead of letting your business control you.

What This Means for Business Owners and Borrowers

The core message of this episode is simple: stop staring at interest rates and start looking at your business. Know your balance sheet the way a lender would examine it. Understand your five Cs — cash flow, collateral, character, credit, and capacity. If those are solid, a rate cut is a nice bonus. If they are not, no rate environment is going to save you.

Steph's closing remarks hit hard. The average American household is at record debt. The federal government is paying more on its own debt than it spends on defense. The winners in this environment are not the people who can borrow — they are the people who are ready when the money becomes available. Get bank-ready now, model both scenarios, and position yourself to move fast when opportunity arrives.

If a $150 monthly difference is the thing holding you back from growth, the interest rate is not your problem.

"If you can't feel it because of $150 difference, you have a more fundamental issue with that business." — Stephanie Dunn, Lords of Lending Episode #13

The Complete Guide to SBA 7(a) Loans — Everything you need to know about the most popular SBA loan product
SBA Lending in 2026: What to Expect — Market trends and rate forecasts for small business borrowers
SBA Deal Structuring Guide — How to structure your loan for the best outcome regardless of the rate environment

Frequently Asked Questions

How much does a 25 basis point rate cut actually save on an SBA loan?

On a $1 million SBA loan with a 10-year term, a 25 basis point reduction saves approximately $140 per month. On a 25-year term, the savings are even smaller. As Brian and Shane discuss in this episode, the difference is not enough to justify delaying a business decision.

Are SBA loan rates fixed or variable?

Most SBA 7(a) loans carry a variable rate tied to the Wall Street Journal Prime Rate. That means if rates drop after you close your loan, your rate adjusts downward automatically. You do not need to time the market — the loan product already accounts for rate changes over time.

Should I wait for rates to drop before buying a business?

The Lords' answer is a clear no — with a caveat. Do not rush into a bad deal, and do not take on debt you cannot service. But do not let a 1-2% rate difference be the reason you miss a good opportunity. The cost of waiting — lost revenue, lost market position, lost momentum — almost always exceeds the savings from a slightly lower rate.

What should I focus on instead of interest rates?

Focus on your fundamentals. Know your debt-to-net-worth ratio. Make sure your business can cash-flow in both high-rate and low-rate environments. Build capital reserves. Understand your operating metrics. As Steph puts it, be ready when opportunity presents itself rather than reactive to headlines. Shane's framework is practical: look at yourself the way a bank would look at you. Assess your strengths across the five Cs — cash flow, collateral, character, credit, and capacity. If those are strong, you will get funded in any rate environment. If they are weak, a rate cut will not fix the underlying issue.

Who should not be borrowing right now?

Steph was clear on this: if you are a startup with no money in the bank, borrowing right now — or at any rate — is a recipe for trouble. She also cautioned against businesses that only cash-flowed during the low-rate era and have not proven they can perform in a tighter environment. The question is not "are rates low enough?" but rather "is this business strong enough to carry debt and still grow regardless of what rates do next?"

Ready to Take the Next Step?

Stop waiting for perfect conditions and start building. The Lords of Lending Training Platform gives you the tools, frameworks, and deal-structuring knowledge to move with confidence — no matter what the Fed does next.

Explore training options at learn.lordsoflending.com/pricing

This content is for educational purposes only and does not constitute legal, financial, or investment advice. Consult with a qualified attorney, CPA, and financial advisor before making business or financing decisions. Loan terms, rates, and programs are subject to change and vary by lender.