March 8, 2021
Main Street Monday— Equifax 2021 Small Business Lending Activity Report
According to Equifax’s most recent small business lending activity report, 7(a) and 504 lending returned to near pre-pandemic levels late last year. However, since December SBA lending activity has steadily fallen to rates similar to that of 2017.
Here are some of the key findings from Equifax’s March issue of Small Business Insights:
- Small business lending activity is the lowest year over year for the accommodation and food services sector (-32%). However, arts, entertainment, and recreation (-29%); mining quarrying, oil, and gas (-20%); educational services (-19%), and real estate (-13%) have also seen a drop in lending.
- Agriculture (+11%); construction (+9%); and public administration (+5%) lending activity continues to rise.
- Small business loan delinquencies 31-90 days past due spiked during the pandemic to an average of nearly 2.5% but has since dropped to around 1.7% and has remained relatively level for the past 3 months.
- At the height of the pandemic, construction, retail, and transportation had the highest number of delinquencies 31-90 days past due (all of which were nearing 3% in early summer). Since then, Construction and transportation have dipped below pre-pandemic levels. However, retail levels remain elevated.
- Agriculture delinquencies for both 31-90 days past due and 91-180 days past due remain low with only a small spike to about 1% over the summer for loans 31-90 days past due and virtually no spike in loans 91-180 days past due.
The COVID-19 pandemic has had an unusual effect on defaults. Previous economic crises saw elevated defaults which impacted the secondary market for several years. However, CARES Act loans and 1112 payments have resulted in low defaults. Later this year, defaults are expected to rise to a higher than normal level. However, voluntaries are expected to stay low.
Click here to read Equifax’s full report.