TLDR: Higher interest rates mean 3 things 1. Harder to get investors to want to invest in your deal 2. The expectations of investors will be higher, and you will pay higher interest rates 3. Important to choose your investors wisely As interest rates increase the cost of capital increases. This post may be a good starting point for how to think about where an investor might be coming from. As an investor the first thing you look at is what is the "risk free rate" right now a 10 year treasury note is just about 5% (4.93% as of Sept 10th 2026) The Prime Rate right now around 6.75% and SBA might be somewhere close to 10% depending on the deal. Why does any of this matter for what an investor should expect? Well any investor will be subordinated to the SBA loans... In other words the SBA gets paid first (because bond holders get paid before equity investors, and the SBA holds senior debt) and after that if any money is left over they will get paid (when things go badly). This often means they get paid nothing and have a full loss of capital when things go bad. So its reasonable to assume for their higher implied risk (more risk than SBA) they will want an IRR north of the loan the SBA is giving. So your average investor may look for a greater step up, or may want some form of interest in addition to their equity percentage as part of their investment. As a hypothetical situation, an investor in this form of somewhat risky investment may seek to get something of an IRR between 15%-20%. It is important to talk with your potential investor about what their expectations are, if they are wanting dividends (this will take away from company growth) what their time horizon for exit is, and what a home run looks like for them, and for you. Map this out in excel so you have a very clear understanding of everything This is going to put a bit more pressure on you to perform, so think deeply about who you bring on to your cap table, and ask around. Ask for references from equity investors. Specifically, ask for a reference to a company they invested in where things did not work out. Almost all investors are great to work with when things are going well, but look at how they treat founders when things are a bit rougher than expected. Your investors are your business partners be thoughtful in finding people that will be supportive of you and maximize your chances of success. Also understand what their needs and expectations are up front. Being able to have everyone on the same page before the deal starts is essential