Small Business Lending Increases in November 2023
THE EQUIFAX NOVEMBER SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending increased by 5.6% month-over-month, indicating that small business activity could be healthier than expected in the near-term. To that end, the SBLI three-month moving average is now in the top 5% of historical readings, up 3.2% year-over-year.
Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due remained flat at 1.71% in November 2023 vs October 2023. The SBDI 91–180 Days Past Due rose to 0.57%, while defaults rose to 2.91%, both up year-over-year.
While nominal small business lending increased in November, higher interest rates and a slowing economy may still have an impact on the demand for new loans as 2024 unfolds. Early delinquencies did hold steady, but serious delinquencies ticked up two basis points along with rising defaults. These trends are likely to continue, particularly if consumer spending slows later this year as many economists anticipate.
Regional Analysis
Small Business Lending:
Lending activity was up in 37 states including six of the ten largest states, as compared to one month ago. North Carolina saw a small bump in lending month over month, while the other large states stayed flat or slightly declined. On a year-over-year basis, lending activity was up in 35 states including eight of the ten largest states, led by Michigan and Florida. Lending declined year-over-year in California and Pennsylvania.
Small Business Delinquency and Default:
Month-over-month, 38 states had an increase in delinquency, including nine of the ten largest states. Year-over-year, nearly every state had an increase in delinquency, including nine of the ten largest states, with an average increase of nearly 44 basis points. Montana, North Dakota and South Dakota had the most annual improvement in 31-90 day delinquency, while Maine and Nevada had some of the largest increases. Of the ten largest states, Georgia has the highest default rate at 4.18%. Month-over-month, nearly every state had an increase in default rate, including nine of the ten of the largest states with Pennsylvania showing a small improvement. Year-over-year, every state had an increase in default rate with the average increase being 46%.
Industry Analysis
Small Business Lending:
Small business lending held steady or rose on a monthly basis in 15 of 18 tracked industries in November, led by Health Care & Social Assistance; Arts, Entertainment & Recreation; and Construction.
Lending activity weakened on a monthly basis in Mining, Oil & Gas and Professional, Scientific & Technical Services.
Compared to October 2023, lending rose in 15 of 18 industries in November, most notably in Arts, Entertainment & Recreation and Education. In contrast, lending fell most in Transportation & Warehousing and Agriculture.
Small Business Delinquency and Default:
In November 2023, delinquencies rose in five of the six tracked industries and were flat in Agriculture. As in previous months, delinquencies rose most notably for Transportation.
On an annual basis, from November 2022 to November 2023, delinquencies climbed in all six tracked industries, led by a triple-digit increase in Transportation. Meanwhile, defaults increased in 11 of the 18 tracked industries in October, with sharp increases in Transportation and Mining. Public Administration and Information saw the largest monthly declines.
On an annual basis, from November 2022 to November 2023, defaults rose in 15 of the 18 tracked industries, led by Mining, Oil & Gas.
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.