PayNet Forecasts 3.57% Default Rate for Small Business Loans in 2025
April 16, 2024
Delaney Sexton
Contributing Editor
PayNet Forecasts 3.57% Default Rate for Small Business Loans in 2025
PayNet’s Small Business Lending Index measures the volume of new commercial loans and leases to small businesses, and there was a positive reading in February 2024. Compared to February 2023, small business lending increased 3.6%.
The small business delinquency rate was 1.71% as of February 2024. The rate increased from PayNet’s last reading. In particular, small business delinquencies are high across the Southwest, Southeast, and Northeast parts of the United States. In the North, small business delinquency rates are low in comparison to the rest of the country. In fact, three states’ delinquency rates are below 1%: Montana at 0.99%, North Dakota at 0.66%, and South Dakota at 0.6%.
The Small Business Default Index appears dismal as PayNet found an increase in small business loan defaults in every U.S. state. Nearly every state is showing greater risk, with Only North Dakota and Minnesota currently being under 2%. The average default rate is 3.18%.
PayNet is predicting that default rates will climb everywhere in the next year. They anticipate the default rate will be 3.57% next year, a rise of 0.39% from the current default rate.