Banks use many factors to decide what interest rate to charge on loans, including the Federal Reserve’s overnight lending rate, the overall inflation level, and the borrower's creditworthiness.
The prime rate, which is the interest rate that banks charge their most creditworthy customers, is used as a benchmark for setting other commercial business loan rates. In general, when the prime rate goes up, so do other rates. However, banks may also offer promotional rates to attract new customers.