RSM US funding report data identifies signs of substantial financial stress.
Rising real interest rates are pushing up the cost of commercial and industrial loans, making it harder for middle market businesses to meet payrolls and finance their expansion, according to the RSM US Middle Market Business Index (MMBI) Funding Special Report, presented by RSM US LLP.
The survey found that middle market firms are paying between 10.9% and 15.5% for financing, and these rates are pushing the risk premiums on loans close to double digits. Additionally, 34% of smaller middle market firms ($10 million to $50 million in revenue) have loans from commercial banks with rates below 5%, and 24% have loans with rates between 5% and 7%. The report explains that those loans will have to be rolled over in the coming years at higher rates, posing an additional threat to cash flow.
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