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I’m trying to understand how the recent shift in the federal funds rate is actually affecting my small business loan. The bank says my variable rate is tied to the prime rate, but the correlation doesn’t seem direct and the lag is confusing me.

From my side I started tracking prime rate changes right after each Fed move and checked my loan statement. When prime moved, the payment shifted by a small amount and it usually appeared in the next billing cycle. The lag felt real but not huge.

Yeah the correlation isn’t clean in practice. The bank has margins, floors, and sometimes extra fees, so a Fed move doesn’t always translate one to one on the number you see on a statement. It can creep in slowly and then jump a bit when a new cycle lands.

One thing I did was ask for a line by line breakdown of how the rate was calculated for a few months, but they handed me a generic summary. It got me thinking about cash flow and whether little timing mismatches were wrecking the month, not just the rate itself. Still, the math here feels fussy.

Could the real issue be that you are chasing the wrong trigger, maybe the fees or the amortization schedule, not the rate movement itself?

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