Equifax Small Business Lending Index Shows Modest Decline in June Amidst Economic Resilience

August 17, 2023

THE JUNE SMALL BUSINESS INDICES REPORT IS SEEING SIMILAR PATTERNS TO THOSE OF THE LAST THREE MONTHS. The Small Business Lending Index (SBLI) continued its slide with a decrease of 2.7 points (-1.8%) to 150.6 but remained 5.2% above its level a year ago. However, the SBLI is not adjusted for inflation. The Small Business Delinquency Index (SBDI) at the measure of 31-90 Days Past Due increased 4bp to 1.67% and rose to 41bp above its level a year ago. The 91–180 Days Past Due delinquency rate saw a smaller increase of 2bp, reaching 0.49%, but remains elevated with a 15bp year-over-year increase. On the other hand, defaults saw a more substantial rise of 7bp in June, bringing the default rate to 2.56%, a significant 81bp above the levels observed a year ago.

“While we are observing a decline in the SBLI, the year-over-year analysis shows positive growth,” said Bill Phelan, Senior Vice President at Equifax. “Overall, the small business sector is showing its resilience in the face of economic challenges.”

Regional Findings:

Lending activities increased in eight out of the ten largest states, with Michigan leading the way and hitting an all-time high in lending activity. On a yearly basis, lending activity rose in nine out of the ten largest states, with Florida (+7.2% Y/Y), Michigan (+6.6% Y/Y) and North Carolina (+6.1% Y/Y) showing significant increases over last year. In regards to delinquencies, all ten of the largest states showed an increase, led by Florida (+92bp Y/Y). Defaults also saw all 10 of the largest states rising, with triple digit increases in Georgia (+161bp Y/Y), Florida (+151bp Y/Y), and Texas (+138bp Y/Y).

Industry Findings:

Health Care & Social Assistance (+1.4% M/M) reached a new, all-time high in lending and 12 of 18 industries saw an overall rise. Delinquencies showed a less optimistic picture, with all six tracked industries showing a rise in June.  

The economic landscape continues to show both positive and negative conditions, leaving business owners uneasy. According to the NFIB’s latest Small Business Optimism Survey, the share of owners expecting better business conditions over the next six months improved by 10 points from May, though it is still well into the negatives (-40%). 

“Small business financial stress is likely to continue to rise, with mixed numbers,” added Phelan. “The indices both worsened during June and challenges are reflected across businesses in all industries. ” 

Produced monthly, the Small Business Indices help lenders and businesses track changes in the small business marketplace by providing insights into lending, default, and delinquency trends. To learn more and view the latest reports, check out our Small Business Indices page.