Small Business Lending Improved as 2024 Began

March 22, 2024

THE EQUIFAX JANUARY SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending improved in January by 8% month-over-month and 1% year-over-year. The SBLI three-month moving average remained steady month-over-month while increasing 3.9% year-over-year.

Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due ticked up 1 bp to 1.74% in January 2024. The SBDI 91–180 Days Past Due rose 2 bps to 0.62%. Defaults rose to 3.11%, up 10 basis points vs. December 2023.

Nominal small business lending activity improved in January, following a sharp decline in December. Delinquency rates fell in line with pre-pandemic levels, while defaults were 17% above January 2020 levels and appear to be rising more quickly. 

The Federal Reserve is signaling that rates will hold steady through the first half of the year, but the near-term economic climate for small businesses is generally positive. Consumer debt levels could also spark a spending pullback later this year, representing a key factor to watch for Main Street business owners.

Regional Analysis

Small Business Lending:

Compared to January 2023, annualized lending volumes were up in 33 states, including seven of the 10 largest states. Florida, New York, and Illinois all showed gains of more than 4%. Georgia, Texas, and Pennsylvania decreased slightly from volumes last year.

Month-over-month, 29 states showed increased lending activity. Maine and Vermont showed the largest gains, while Northern states such as North Dakota, South Dakota, and Montana had small decreases. Four of the 10 largest states showed minor decreases, while the rest increased by 1% or less. Ohio had the largest boost in lending activity of the 10 largest states at +1% over last month.

Small Business Delinquency and Default:

Defaults increased in every state annually and in 48 states month-over-month. The average increase in default rates by state was 49%. Maryland had the smallest increase over last year at 14%, while Maine had the largest increase at 77%. Georgia and Florida had the highest overall default rates of the 10 largest states, both more than 4.4%.  Pennsylvania has the lowest at 2%. Only Texas showed a small month-over-month decrease in default rates at 1%, while New York had the largest increase at nearly 8%. 

In 31-90 day delinquency, 40 states (including nine of the 10 largest states) had an increase in delinquency month-over-month. Additionally, 45 states increased their delinquency rates from last year (including all 10 of the 10 largest states) with the average increase reaching 42 bps. Month-over-month, Kentucky had the largest delinquency increase of nearly 30 bps, while Arkansas, Delaware, and Connecticut all showed 20 bp increases. Florida (+3.2%), Georgia (+2.9%), and Connecticut (+2.8%) have the highest delinquency rates in January 2024, while South Dakota (0.5%) and North Dakota (0.6%) have the lowest. Connecticut showed the largest annual increase in delinquency, rising 130 bps since last January.

Industry Analysis

Small Business Lending: 

  • In January 2024, small business lending held steady or rose on a monthly basis in 9 of the 17 tracked industries, led by Health Care and Social Assistance; Construction; and Other Services. 

  • Lending activity weakened on a monthly basis in eight of the 17 tracked industries, led by Information; Transportation and Warehousing; and Finance and Insurance.

  • Compared to January 2023, lending held steady or rose in 11 of the 17 tracked industries, most notably in Health Care and Social Assistance; Educational Services; and Arts, Entertainment and Recreation. In contrast, lending fell most in Information and Transportation and Warehousing.

Small Business Delinquency and Default:

  • In January 2024, the annualized Small Business Default Index rose in 15 of the 17 tracked industries vs. December 2023, rising most in the Arts, Entertainment and Recreation (+18%) and Wholesale Trade (+10%) industries. 

  • On an annual basis, from January 2023 to January 2024, the Small Business Default Index increased in all 17 tracked industries, led by a triple-digit increase (+154%) in Transportation and Warehousing. Arts, Entertainment, and Recreation (+84%) and Retail Trade (+74%) also had large increases in default rates. 

  • On an annual basis, the 31-90 day Small Business Delinquency Index rose in all tracked industries vs. January 2023, rising most in Transportation (+59%). 

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.