October 25, 2022
SBA Hot Topic Tuesday – Defaults Predicted to Rise in 2023
Yesterday, Sarah Briscoe from Equifax joined Coleman Report Live! to report on the state of commercial lending. She shared information from Equifax’s Small Business Lending Index, Small Business Delinquency 31-90% Index, and Small Business Default Index.
Here are the statistics:
• The Equifax Small Business Lending Index increased by 10% from July to August 2022.
• According to the Equifax Small Business Lending Index, from August 2021 to August 2022 the information industry and accommodation and food services industry have seen the most growth with a 30% and 17% increase respectively.
• The public administration industry has seen the largest drop in lending activity with a 20% decrease. This is followed by a 9% decline in the transportation and warehousing industry.
• Equifax’s Small Business Delinquency Index increased by 0.01 to 1.30% in August 2022, the fourth month in a row it increased.
• The transportation industry was most likely to see delinquencies with a rate of 29%. Health care follows next with a rate of 17%.
• The Small Business Default Index increased by 0.02 to 1.80% in August 2022, but it is a decrease compared to last year.
• Public administration saw the most significant month-over-month increase (18%) to 1.3% in August.
• Educational services had the second largest month-over-month increase to 1.3% in August.
• Mining, quarrying, and oil and gas extraction had a 58% drop from August 2021 to August 2022. Their default rate was 1.2% in August.
• The information industry had the highest default rate in August 2022 at 2.9%.
• Arts, entertainment, and recreation had the lowest default rate at 0.8% in August.
• In 2023, the forecasted default rate average for all industries is 2.4%.
• The highest forecasted default rate in 2023 is for the information industry at 3.3%.
• The industries with the lowest predicted default rates in 2023 are the wholesale and entertainment industries.