Founders often expect their industry to set the price of their debt. In the loan books of the US business development companies it hardly does. We read the industry from each loan's description, where 54% of loans state one, and grouped the 26 industries with 25 loans or more.1
The median spread over the base rate runs from 450 basis points for electronic equipment to 525 for consumer services, food, consumer products, hotels and real estate. That is a range of three quarters of a percentage point. Software, the largest industry in the book with $31.4bn lent, sits at 475. Health care, the second largest at $26.8bn, sits at 500.
The difference shows up elsewhere. Some loans let a borrower pay part of the interest in more debt rather than cash, which is called payment in kind, or PIK. By industry the share of money lent in such loans varies sixfold. Insurance is at 2.7%, electronic equipment 2.8% and telecommunications 4.9%. Environmental services are at 32.9%, distributors 23.3%, commercial services 22.6% and financial services 22.4%. Aerospace and defence, at 19.6%, is high too.
PIK is used for two reasons. A lender may agree it from the start, so that a company spending on growth or an acquisition keeps its cash. Or a lender may accept it later, from a borrower that cannot pay in cash. The filings rarely say which, and we draw no conclusion about any industry's health from the share alone. What it does show is how lenders adapt. They hold the price roughly constant across industries and change the terms instead: how much of the interest is deferred, and so how much risk the lender carries to the end of the loan.
Lenders price the industry into the structure, not the spread.
For a borrower, this changes what to negotiate. The spread on a senior loan from a direct lender is likely to land near 500 whatever the business does. The room is in the rest of the terms: the PIK option, the covenants, the call protection, the fees and the amount. An industry that lenders find harder will usually be offered less, or more of it deferred, rather than a much higher margin.
Method. Debt positions held by BDCs in the SEC's data sets for the quarter to 30 June 2026, revolving credit facilities excluded. The industry is read from each loan's description using a fixed list of industry words; where a description names none, the loan is left out of this note. Spreads are over the floating base rate, usually SOFR. PIK counts loans with a stated PIK rate or marked as PIK. The full table, with each industry's spread range, all-in rate and share of senior debt, is in the Ledger.
“Lenders price the industry into the structure, not the spread.”
Sources
- Business Development Company data sets, US Securities and Exchange Commission, quarter to 30 June 2026
Cite as: “Industry barely moves the price of a private loan. It moves how the interest is paid.”, Norvian Review, 27 October 2026.