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5 Industries Most Affected by Rising Interest Rates in 2026

Published May 21, 2025 · Updated October 6, 2026

Short answer: The five industries most affected by rising interest rates in 2026 are real estate and construction, small businesses, manufacturing, healthcare and medical practices, and retail and e-commerce. Each one leans on credit to build, stock, equip or expand, so a higher cost of borrowing shows up quickly in its costs or its sales.

On September 16, 2026, the Federal Reserve raised the target range for the federal funds rate by a quarter point to 3.75 to 4 percent, after holding it at 3.50 to 3.75 percent at every meeting from January through July. The bank prime rate, the benchmark many business loans and credit lines are priced from, moved from 6.75 to 7.00 percent the next day. With borrowing costs climbing, businesses that rely heavily on financing are struggling to adapt, and the cost of capital is affecting operations, investments, and consumer demand across the board.

While interest rate hikes are intended to curb inflation, they come with unintended consequences, especially for industries that depend on loans for operations, expansion, or survival. In this article, we’ll explore five industries most affected by rising interest rates, the specific challenges they face, and the potential strategies businesses can adopt to stay resilient.

1. Real Estate & Construction: The Market Squeeze

The real estate industry is among the hardest hit by interest rate hikes, as higher mortgage rates deter homebuyers, reduce demand for new properties, and increase borrowing costs for developers.

The average 30-year fixed mortgage rate was 7.28 percent in the week of October 1, 2026, up from 6.66 percent at the end of August, reducing housing affordability and slowing down home sales.
Construction spending in August 2026 was 1.7 percent below August 2025, and spending over the first eight months of 2026 was 3.1 percent below the same months of 2025.
Banks reported basically unchanged standards and weaker demand for construction and land development loans in the second quarter of 2026, according to the Federal Reserve Senior Loan Officer Opinion Survey.
Construction firms relying on short-term loans for projects are experiencing cash flow constraints, limiting new developments.

Survival Strategy: Developers and investors are shifting towards private equity funding and alternative financing methods to offset the impact of high-interest loans. Additionally, more developers are prioritizing multi-family housing units over single-family homes to maximize returns.

If you carry MCA debt: Construction and real estate owners with a merchant cash advance can read how construction business debt relief works and how MCA debt relief and settlement work.

2. Small Businesses: The Financing Crunch

Small businesses are the backbone of the economy, but many rely on credit lines, loans, and business financing options that have become costlier in 2026.

The bank prime rate is 7.00 percent as of October 5, 2026, up from 6.75 percent before the September increase, so variable-rate loans and credit lines priced from it cost more, making capital-intensive investments more difficult.
On SBA 7(a) loans, the rate is negotiated with the lender subject to SBA maximums, and on a variable-rate loan the lender may require a different payment amount when the interest rate changes.
Merchant Cash Advances (MCAs), often used by small businesses for quick capital, do not reprice when the Fed moves, because the payback amount is set by a factor rate at signing. Higher rates add to the strain indirectly, by raising the cost of the bank credit an owner would use to refinance an advance or run the business alongside one.
Banks reported basically unchanged standards on commercial and industrial loans to small firms in the second quarter of 2026, and basically unchanged demand from them, per the Senior Loan Officer Opinion Survey. That survey was taken before the September increase.

Survival Strategy: Many small businesses are exploring debt restructuring options and seeking financial advisors to renegotiate loan terms before rates increase further. Some are also pivoting to bootstrap funding, relying on retained earnings to fund operations rather than taking on new debt.

If you carry MCA debt: See how small business debt relief works, and compare firms on our list of MCA settlement companies before signing with anyone.

3. Manufacturing & Industrial: Higher Operating Costs

The manufacturing sector is feeling the squeeze from interest rate hikes due to its reliance on equipment financing, supply chain credit, and operational loans.

Equipment loans and credit lines priced from the prime rate, now 7.00 percent, cost more to carry, making capital investments harder to justify.
Manufacturing output fell 0.3 percent in August 2026 and was 0.9 percent above its level a year earlier, and industrial capacity utilization was 76.3 percent, 3.1 percentage points below its long-run average, according to the Federal Reserve G.17 industrial production release.
Debt-heavy industrial firms face margin pressure as financing new projects becomes prohibitively expensive.

Survival Strategy: Companies are optimizing internal costs, investing in automation, and renegotiating vendor contracts to sustain operations without excessive borrowing. Some businesses are also reshoring operations to mitigate supply chain costs and geopolitical risks.

If you carry MCA debt: Manufacturers with a merchant cash advance can read how manufacturing business debt relief works.

4. Healthcare & Medical Practices: Expensive Debt Burdens

Hospitals, private clinics, and healthcare providers are struggling with increased debt servicing costs, particularly those that financed equipment purchases or facility expansions with loans.

Demand for care is still growing: health care employers added about 520,000 jobs in the 12 months to September 2026, according to Bureau of Labor Statistics data. The rate pressure on practices shows up on the financing side.
Equipment, build-out and practice acquisition loans priced from the prime rate cost more after each increase, and prime is now 7.00 percent.
MCAs taken by some clinics have compounded financial difficulties, as interest rate hikes make cash flow constraints even worse.

Survival Strategy: Healthcare providers are focusing on revenue cycle management and exploring alternative funding sources such as leasing instead of purchasing medical equipment outright. Additionally, some clinics are consolidating into larger medical groups to share operational costs.

If you carry MCA debt: Clinics and dental practices with a merchant cash advance can read about healthcare and dental business debt.

5. Retail & E-Commerce: Costlier Inventory and Consumer Credit

Retailers and e-commerce businesses are facing a double-edged sword: their own borrowing costs are rising, and their customers face tighter credit.

Inventory financing and credit lines priced from the prime rate, now 7.00 percent, cost more to carry into the holiday season.
Sales are still rising in dollar terms: e-commerce sales grew 12.2 percent from a year earlier in the second quarter of 2026 and made up 17.1 percent of retail sales, and retail and food services sales in August 2026 were 6.0 percent above August 2025, before adjusting for price changes.
Banks reported tighter standards for credit card loans in the second quarter of 2026, per the Senior Loan Officer Opinion Survey, which can make big-ticket purchases on credit harder for customers.

Survival Strategy: Businesses are pivoting to lean inventory models, offering payment plans to customers, and focusing on high-margin products to sustain profitability. Many are also investing in omnichannel sales strategies to reach more customers online and in-store.

If you carry MCA debt: Store owners and online sellers with a merchant cash advance can read how retail business debt relief works.

Other Industries That Feel Higher Rates

Auto dealers and auto service businesses are another example: banks reported weaker demand for auto loans in the second quarter of 2026, according to the Federal Reserve Senior Loan Officer Opinion Survey. Trucking and logistics companies that finance trucks and equipment face the same cost of credit. BDA has pages for auto businesses and trucking companies.

Conclusion: Preparing for an Era of High Interest Rates

Rising interest rates in 2026 are creating financial headwinds for many industries, making debt management and strategic financial planning more critical than ever. Businesses must explore alternative financing, optimize operations, and seek professional debt restructuring assistance when necessary.

For companies struggling with high debt obligations, especially those relying on MCAs, Business Debt Adjusters (BDA) offers tailored solutions to restructure debt, lower repayment burdens, and regain financial stability.

Need help navigating business debt? Contact BDA today for expert financial guidance.

Sources

Figures on this page were checked against these records on October 6, 2026.

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