June 7, 2023
C-Suite Wednesday – Small Business Lending and Delinquencies Are Climbing
“In March, the Equifax Small Business Lending Index increased to its highest point in almost two years, defying the broader slowdown taking hold in the U.S. economy. Main Street has always found ways to adapt to ever-changing economic conditions, and the first three months of 2023 were no exception,” reads the Equifax Commercial Strategic Insights for May 2023.
Here are the facts about small business lending:
Small Business Lending Index
- In March, the Small Business Lending Index increased 1.4% from the previous month.
- Small business lending increased by 4% from March 2022 to March 2023.
- Ohio and Texas are reaching record highs in small business lending according to Equifax.
- Illinois had the largest decline in monthly small business lending.
- States with the most significant increases in small business lending compared to a year ago include Florida (+5.6%), Ohio (+3.6%), and North Carolina (+3%).
- The Information industry (+25.1%) and Arts, Entertainment, & Recreation industry (+22.8%) had the greatest rise in small business lending since last year.
Small Business Delinquency Index & Default Index
“Equifax data indicate that delinquencies and defaults have returned to pre-pandemic levels, suggesting that the ‘normalization’ period of credit market conditions that has characterized the last year is now over. In its place, a new era has begun in which financial stress, while still manageable for most small firms, is approaching sustained levels that have not been experienced in more than a decade.”
- The Equifax Small Business Delinquency Index for loans 31 to 90 days past due was 1.56%, and the index was 0.44% for loans 91 to 180 days past due.
- Equifax’s reading for small business loan defaults was 2.35% in March.
- On a monthly and yearly basis, delinquencies rose for all ten of the largest states with Florida leading the rise.
- Texas, Georgia, and New York experienced the most notable rise in small business loan defaults compared to the previous month.
- In March, in all but one of the 18 industries that Equifax follows had an increase in defaults.