How 2025’s High Rates, Tariffs, and Loan Delinquencies Are Pressuring Midsize Businesses

As we settle deeper into 2025, midsize businesses are navigating three major economic crosswinds:

Nolan Montiel

6/24/20251 min read

1. Fed Maintains Elevated Interest Rates

As of June 18, 2025, the Federal Reserve held the federal funds rate steady at 4.25–4.50%, projecting just two cuts later in the year—and only if data supports it wsj.comfedsmallbusiness.orginvestopedia.com+3reuters.com+3advisorperspectives.com+3. Rising rates mean borrowing costs remain high, especially for those dependent on variable-rate loans.

2. Loan Delinquencies Are Rising

By the end of 2024, over $28 billion in corporate bank loans were at least one month overdue—the highest delinquency rate seen in nearly a decade deloitte.comft.com. Mid-size firms, with less financial cushion, are more exposed to this strain.

3. Tariffs Are Adding Fuel to the Fire

New and renewed tariffs on imports from Canada, Mexico, China, and other countries not only disrupt supply chains but also push inflation higher—delaying any potential rate cuts advisorperspectives.com+12ft.com+12marketwatch.com+12.

Why this matters for midsize businesses:

  • Borrowing costs are elevated due to sticky interest rates

  • Higher import costs erode margins or fuel price hikes

  • Tighter financing conditions make it tougher to fund growth or refinance debt

Surveys show many mid-size companies report challenges with uneven cash flows (51%) and paying operating expenses (56%)—conditions likely worsening as costs rise businessinsider.com+5reuters.com+5federalreserve.gov+5fedsmallbusiness.org+1marketwatch.com+1.

Strategic Actions for Midsize Firms

  1. Lock in Fixed-Rate Financing
    Avoid variable-rate uncertainty by opting for fixed-rate loans where possible.

  2. Diversify Supply Chains
    Explore domestic sourcing to reduce tariff exposure.

  3. Use Alternative Funding Sources
    Look beyond traditional banks—consider fintech lenders, invoice financing, and lines of credit that offer faster approval.

  4. Tighten Cash Management
    Enhance cash flow forecasting and build a cushion to buffer unforeseen costs.

Don’t let 2025’s economic headwinds stall your momentum. At One Turn Solutions, we specialize in tailored financing packages—including fixed-rate options and lines of credit—to help midsize businesses navigate rising rates, tariffs, and tighter credit.

➡️ Contact us today to discuss how we can support your growth and stability.