May 4, 2021

Caity Roach

SBA Hot Topic Tuesday — Small Business Lending Activity Improves to Pandemic Era High

According to PayNet’s most recent issue of Strategic Insights, Small business lending activity has reached a pandemic era high and is now 2% higher than the last pre-pandemic reading. Additionally, delinquencies have fallen to their lowest level since the pandemic began and defaults saw their largest monthly decline in over seven years.

Here are some of the key findings from PayNet’s April issue of Strategic Insights:

  • In February, the PayNet Small Business Lending Index (SBLI) showed a 7.3% increase in lending activity month over month and is now 2% above its year-over-year level.
  • Despite the strong February headline reading, lending activity declined in six of the ten largest states, including New York (-2.6% M/M), Michigan (-1.7% M/M), and Pennsylvania (-0.7% M/M). Meanwhile, lending accelerated in North Carolina (+1.3% M/M), Illinois (+1.1% M/M), and Florida (+0.6% M/M).

  • In February, lending activity notably improved in Construction (+1.1% M/M) and Public Administration (+0.5% M/M). Meanwhile, large decreases were seen in Accommodations (-5.0% M/M), Information (-3.0% M/M), and Professional Services (-2.3% M/M).

  • The Equifax Small Business Delinquency Index (SBDI) 31–90 Days Past Due declined 2 basis points in February and is now up 6 basis points from a year ago. The SBDI 91–180 Days Past Due was unchanged in February and up 21 basis points year over year.

  • Defaults declined 5 basis points in February to 3.21% (the largest monthly decline in over seven years). However, defaults remain 91 basis points above February 2020 levels.

  • Delinquencies decreased in all six tracked industries in February, with five of the six now at the lowest level since the pandemic began.

Click here to read PayNet’s full report.