Small Business Lending Decreased in May 2025

THE EQUIFAX MAY SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending decreased by 6.8% month-over-month and 5.3% year-over-year. The SBLI three-month moving average increased 0.7% month-over-month but decreased 2.8% year-over-year.

Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due increased slightly to 1.72% in May 2025, up two basis points month-over-month. The Index increased one basis point year-over-year. The SBDI 91–180 Days Past Due increased slightly (1 bp) to 0.70% from April 2025 to May 2025. The Small Business Default Index (SBDFI) remained steady at 3.32% and was down three basis points month-over-month. 

While lending activity remains sluggish as high interest rates weigh on demand, small business defaults continue to fall, and delinquencies have flattened. The near-term outlook for small businesses is mixed. Owner sentiment has improved in recent months after falling sharply earlier in the year, and recent passage of the tax bill may benefit many small firms. At the same time, signs of near-term economic weakness remain, including a recent consumer spending slowdown, evidence of emerging cracks in the labor market, and expectations of rising inflation — these factors are likely to weigh on small firms this summer and fall, which may curb lending activity.

Regional Analysis

Small Business Lending:

In May, 27 states had a year-over-year decrease in 12-month rolling lending volumes. Of the ten largest states, five showed a decrease from 2024. California decreased 10%, Georgia decreased 8%, Florida decreased 3%, and New York dropped 1%. Illinois showed 6% growth from last year while Michigan grew 5%. Of all states, Iowa (+14%), South Dakota (+13%) and Hawaii (+9%) had some of the highest growth numbers from last year. Wyoming (-11%) posted the largest decrease from May 2024.

Month-over-month, nominal lending activity was down in 31 states in the preceding 12 months, including seven of the ten largest states. Only Michigan and North Carolina increased slightly (of these ten) in the 12-month period ended in May 2025 as compared to the 12-month period ended in May 2024. Ohio dropped the most, showing -1% in lending volumes month-over-month. 

Small Business Delinquency and Default:

Defaults increased in 27 states annually but decreased in the majority of states (36 of 50) month-over-month. Year-over-year, New York improved 24%, while Maine had the largest default rate increase, jumping 44%. Florida (4.5%), Texas (4.4%) and Louisiana (4.3%) had the highest overall default rates amongst all states. North Dakota (2.0%), Minnesota (2.3%) and Iowa (2.3%) had the lowest. Of the ten largest states, three states increased default rates month-over-month: Texas (+2.3%), Pennsylvania (+2.1%) and Ohio (+0.6%). The remaining states decreased default rates over April 2025, led by Illinois which dropped by almost 3%.

In 31-90 day delinquency, 35 states had a decrease in delinquency month-over-month. Florida (2.8%), Georgia (2.6%) and Connecticut (2.5%) had the highest delinquency rates in May 2025, while South Dakota (0.8%), Ohio (1.0%) and Minnesota (1.1%) had the lowest. North Dakota showed the largest annual increase in delinquency, rising 88 basis points since last May. Of the ten largest states, Michigan (+23 bps), Georgia (+13 bps) and Texas (+6 bps) had the largest year-over-year increases. North Carolina decreased 24 bps from May 2024, Illinois decreased 9 bps, and California dropped 6 bps.

Industry Analysis

Small Business Lending: 

• In May 2025, nominal small business lending fell in six of the 17 tracked industries month-over-month, holding steady in Wholesale Trade, Construction, and Health Care and Social Assistance. 

• 12-month rolling lending activity weakened most month-over-month (-3%) in Mining, Quarrying, and Oil and Gas Extraction.

• Compared to May 2024, lending rose most in Arts, Entertainment, and Recreation (+10%), followed by Health Care and Social Assistance (+3%), Educational Services (+3%). Lending fell in Transportation and Warehousing (-7%), Mining, Quarrying, and Oil and Gas Extraction (-7%), and Other Services (except Public Administration) (-7%). 

Small Business Delinquency and Default:

• In May 2025, the annualized SBDFI rose or held steady month-to-month in seven of the 17 tracked industries, with the largest increase in Information (+7%).

• On an annual basis, from May 2024 to May 2025, the SBDFI increased in 13 of the 17 tracked industries, led by Mining, Quarrying, and Oil and Gas Extraction (50%), Arts, Entertainment, and Recreation (36%) and Information (26%).

• On an annual basis, the 31-90 day SBDI increased 6% in the Construction industry and 5% in Retail vs. May 2024. All other segments improved, with Transportation dropping 13% from last year and Agriculture decreasing 11%.

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.