October 27, 2021
C-Suite Wednesday – Small Business Lending Increased Across the Country
In the United States, there is an increase in small business lending, especially in comparison to lending in 2020. Delinquency rates and default rates have been low in the nation, according to Paynet Insights.
Although the Small Business Lending Index decreased 3.2 points or 2.2%, the index is up 8.3% on a year-over-year basis from August 2020 to August 2021. The Small Business Lending Index 3 month moving average was virtually unchanged from the previous month, but it is 6.1% above the August 2020 reading. There were positive rates of investment in the United States in August 2021 except for three states/territories (Nevada, Minnesota, and the District of Columbia).
The Small Business Delinquency Index showed that all states have low percentages of small business loans that are more than thirty days past due but less than ninety-one days past due. These rates range from 0.36% of loans being delinquent (Alaska) to 1.89% of loans being delinquent (Alabama). The District of Columbia presented more of a risk of delinquency with almost 4% of small business loans being delinquent.
There is less risk of small business loans defaulting in every U.S. state. The state with the lowest risk is Minnesota with only 1.21% of loans defaulting, and there is the most risk in Texas where just over 3% of small business loans have defaulted in the last twelve months. Default rates have declined in nearly all states.
Paynet’s outlook forecasting the commercial loan default rate in the country expects more risk in the South, but the level of risk still decreased in all states since Paynet’s previous readings.