Main Street Monday – The Transportation Industry is at the Head of the Rise in Loan Delinquencies & Defaults

July 24, 2023

Delaney Sexton
Contributing Editor

Main Street Monday – The Transportation Industry is at the Head of the Rise in Loan Delinquencies & Defaults

Equifax’s July Commercial Strategic Insights found that small business lending across the nation increased 4.4 points or 3% in May. The Small Business Lending Index reading in May also showed that compared to a year ago, small business lending is up by more than 5%. This positive growth can be found in 13 of the 18 industries that the lending index tracks. Compared to a year ago, Arts, Entertainment, & Recreation grew by 31.2%. On a monthly basis, these are the top industries for small business lending growth:

  • Arts, Entertainment, & Recreation – 2.3%
  • Retail Trade – 2.1%
  • Administrative Support, Waste Management, & Remediation Services – 1.5%

Though small business lending is overall positive, a few industries are experiencing a decline in small business lending. From April to May, Agriculture, Forestry, Fishing & Hunting saw the greatest fall at 2.2%. Following that, the Information industry decreased by 1.5%. Year over year, the most significant decline in small business lending occurred in the Transportation & Warehousing industry at 11.7%.

The Small Business Delinquency Index rose in tandem with small business lending. Small business loan delinquencies reached 1.63% in May, and loan defaults reached 2.48%. Loan defaults are up in 14 of 18 industries led by Transportation and Accommodations & Food Services. On an annual basis, all 18 industries saw an increase in loan defaults and were once again being led by Transportation and Accommodations & Food Services. For loan delinquencies, the Transportation industry was at the head of both monthly and yearly increases in May.

Equifax writes about the Delinquency Index and Default Index: “Both indices have been deteriorating over the last 12 months, reflecting a combination of higher interest rates and slower economic growth that is leading to a slow but steady increase in financial stress. Sectors that are historically more sensitive to interest rates, including transportation, have fared the worst as the Fed cracks down on high inflation by tightening monetary policy, and expectations for additional rate hikes and tighter lending conditions later this year will likely lead to further increases in small business financial stress, which are currently in line with or just above prepandemic levels.”

Equifax Commercial Strategic Insights: July 2023