Small Business Lending Decreased in March 2024

May 20, 2024

THE EQUIFAX MARCH SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending weakened by 10% month-over-month and 7% year-over-year. The SBLI three-month moving average increased slightly month-over-month by 1% but experienced a slight dip of just under 1% year-over-year.

Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due remained steady, at 1.7% in March 2024. The SBDI 91–180 Days Past Due rose 1 basis points month-over-month to 0.64%. The Small Business Default Index rose to 3.2%, up 2 basis points month-over-month.

Overall, lending growth has been mostly flat over the last year, while financial stress seems to slowly but steadily increase. Progress toward achieving the Fed’s inflation target has stalled, but recent data on employment and economic growth are encouraging signs that a soft landing likely remains on track. Still, inflation remains a significant concern for Main Street business owners, and the possibility of a near-term slowdown in consumer demand is a key factor to watch.

Regional Analysis

Small Business Lending:

Compared to March 2023, annualized lending volumes were down in 25 states, including five of the ten largest states. Texas decreased over 2%, while the other four decreasing states (GA, PA, CA, OH) showed dips under 1%. Illinois showed strong growth at +6% year-over-year. 

Month-over-month, 39 states showed decreased nominal lending activity in the preceding 12 months, including eight of the ten largest states.  Maine and Vermont showed the largest gains (both +3%), while North Dakota and Nevada dropped 3%. In the ten largest states, Texas and California dropped over 1% while only Illinois and Ohio showed very slight gains in lending from February (both +0.3%).

Small Business Delinquency and Default:

Defaults increased in every state annually and in 35 states month-over-month, an improvement in the number from last month. The average increase in default rates by state was 40% and the pace of increase has been slowing. 

Maryland had the smallest increase over last year at +2%, while Minnesota had the largest increase at +89% from last year. Georgia, Florida, and Texas have the highest overall default rates amongst all states, with each above 4%. North Dakota and Minnesota have the lowest, each with 2% or lower annualized default rates. In the ten largest states, Georgia and North Carolina both showed one-month decreases in default rates of about 1%. Pennsylvania and Michigan showed the biggest increases in default, both over 2% month-over-month.

In 31-90 day delinquency, 17 states (but none of the 10 largest states) had an increase in delinquency month-over-month. This represents a welcome slowdown in the Small Business Delinquency Index. However, overall delinquency metrics still remain elevated with 38 states increasing their delinquency rates from last year (including 7 of the 10 largest states) with the average increase reaching 34 basis points. Florida (3.1%), Connecticut (2.9%), and Georgia (2.7%) have the highest delinquency rates in March 2024, while South Dakota (0.6%) and North Dakota (0.7%) have the lowest. Connecticut showed the largest annual increase in delinquency, rising 151 basis points since last March.

Industry Analysis

Small Business Lending: 

  • In March 2024, nominal small business lending held steady or rose year-over-year in 9 of the 17 tracked industries. 

  • 12-month rolling lending activity weakened month-over-month in 16 tracked industries, with Professional Services and Manufacturing both down 2%. 

  • Compared to March 2023, lending rose in Health Care and Social Assistance (+18%) and Arts, Entertainment and Recreation (+12%). Lending fell in Information (-13%) and Transportation and Warehousing (-11%), along with Agriculture (-10%).

Small Business Delinquency and Default:

  • In March 2024, the annualized Small Business Default Index rose or held steady in 14 of the 17 tracked industries vs. February 2024, with some of the largest increases in Wholesale Trade (+4%)  and Other Services (+4%). 

  • On an annual basis, from March 2023 to March 2024, the Small Business Default Index increased in all 17 tracked industries, led by a triple-digit increase (+106%) in Transportation and Warehousing. Transportation SBDFI has reached the highest level since January 2011. Other large increases include Retail Trade (+61%) and Arts, Entertainment, and Recreation (+57%).  

  • On an annual basis, the 31-90 day Small Business Delinquency Index rose in all tracked industries vs. March 2023, rising most in Transportation (+37%). 

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.