Worcester Business Journal

16 Worcester Business Journal | November 2, 2026 | wbjournal.com BY SUSAN GONSALVES Special to WBJ F or Central Massachusetts businesses, the high cost of borrowing can mean the dif- ference between purchasing a building, moving ahead with expansion or putting a project on hold. e pressure is particularly sharp for commercial borrowers whose loans are resetting at substantially higher interest rates and could see their borrowing costs climb. Devel- opers also face a difficult combination of elevated construction costs and expensive financing. However, high interest rates have not brought business investment to a standstill. Manufacturers, contractors, retailers and other small businesses across Cen- tral Massachusetts are still borrowing to purchase property, upgrade equip- ment and expand operations. Higher rates are squeezing real estate deals and complicating refinancing, but lenders and economic development organizations say alternative financing programs, lower down payments and gap funding are helping businesses move forward with projects that might otherwise be shelved. Will Kelleher, managing partner of commercial real estate services company Kelle- her & Sadowsky, does not think interest rates are really that high. He said they may be perceived that way only because they are coming off of record lows during the COVID era — where rates were about 4% on the commercial side. He said companies now face chal- lenges with commercial mortgage rates, although they're advertised over 20 years or more and oen reset every five to seven years, depending on the note. "Rates that were fixed at 4% to 4.5% are now increasing to 7% or 7.25% or whatever the current going rate may be," Kelleher said. Kelleher said he does not feel com- mercial deals have stopped because of interest rates, but noted it can be difficult for developers to recover from a reset rate that nearly doubles. Although predictions are subjective, Kelleher said, he believes there will be another slight increase in interest rates before year's end as the Federal Reserve attempts to control inflation and day-to-day costs. Kelleher thinks things will "settle out" eventually but he does not expect to see any substantial relief until the second quarter of 2027. During her four-year tenure as di- rector of Small Business Administra- tion (SBA) and lending at Worcester Business Development Corporation (WBDC), Christina Escobar said she has worked with borrowers across a variety of industries. e organization recently provid- ed loans for heating-ventilation and air-conditioning contractors, a land- scape company, law office, auto-repair shop, thri store, mental-health facil- ity, graphic-design business, restau- rants and more, Escobar said. WBDC also helped finance equip- High rates complicate decisions, but businesses forge ahead with financing PHOTO | ADOBE STOCK FOCUS B A N K I N G & F I N A N C E Will Kelleher, Kelleher & Sadowsky

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