SMEs in Europe and the US may soon feel the pain of rapid interest rate hikes, with analysts and investors apprehensive about the impact of tighter credit conditions aggravated by recent turmoil in the banking sector. The average rate that SMEs pay on bank loans in the US increased to 7.6% from around 5% in 2022, and analysts expect it to hit about 9.5% by mid-year. Meanwhile, rating agency S&P foresees the default rates in the US and Europe reaching 3.75% and 3.25%, respectively, by September this year, which would be more than double the 1.6% and 1.4% seen in September 2022.
