Small Business Lending Decreased in August 2025

THE EQUIFAX AUGUST SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending volumes decreased 8.1% month-over-month and 5.2% year-over-year. The SBLI three-month moving average decreased 1.9% month-over-month and 2.0% year-over-year.

Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due remained flat at 1.76% in August 2025. The 31-90 SBDI decreased five basis points year-over-year. The SBDI 91-180 Days Past Due increased slightly (1 bp) to 0.72% from July 2025 to August 2025. The Small Business Default Index (SBDFI) decreased slightly to 3.29% and was down three basis points month-over-month.

In August, small business lending fell 8.1% from July and is down 5.2% compared to 12 months ago. Although serious delinquencies (91-180 days) have risen modestly over the last two months to their highest point since 2010, short-term delinquencies (31-90 days) have plateaued and defaults have fallen 15 bps since January.

While the release of the official jobs report is delayed, Automatic Data Processing (ADP) private-sector data points to further weakening in the labor market. However, consumer spending appears to have rebounded this summer. A resurgence of capital expenditure activity, fueled by the AI investment boom, has helped keep the economy on track.

Regional Analysis

Small Business Lending:

In August, 33 states had a year-over-year increase in 12-month rolling lending volumes. Of the ten largest* states, seven showed an increase from 2024. Illinois had the strongest improvement at 5.6%. California decreased the most at -11%. Of all states, Oklahoma (+11%), New Hampshire (+10%) and Iowa (+9%) had some of the highest growth numbers compared to the same period last year. Alaska (-15%) and California (-11%) posted the largest decreases from August 2024 of all states.

Despite year-over-year increases, the tide turned in the month of August with more decreases in lending volumes than shown in recent months. Month-over-month, nominal lending activity was down in 36 states in the preceding 12 months, including nine of the ten largest states. Georgia (+1%) was the only state to show a lending increase in the 12-month period ended in August 2025 as compared to the 12-month period ended in August 2024. Pennsylvania and California dropped the most, with both showing more than 1% drop in lending volumes month-over-month.

Small Business Delinquency and Default:

Defaults decreased in 38 states year-over-year and decreased in 34 states month-over-month. Year-over-year, New York improved 30%, while West Virginia had the largest default rate increase, jumping 17%. Florida (4.5%), Texas (4.5%) and California (4.3%) had the highest overall default rates among all states. North Dakota (2.0%), Iowa (2.2%), and Minnesota (2.2%) had the lowest. Of the ten largest states, two states increased default rates month-over-month: Texas (+4.8%) and California (+1.9%). The remaining states decreased default rates month-over-month, led by New York which dropped by 5%.

In 31-90 day delinquency, 22 states had a decrease in delinquency month-over-month. Wyoming (3.9%), Florida (2.9%), Georgia (2.7%) and South Carolina (2.4%) had the highest delinquency rates in August 2025, while South Dakota (1.0%), Delaware (1.0%) and Rhode Island (1.0%) had the lowest. Wyoming showed the largest year-over-year increase in delinquency, rising 147 basis points since last August. Of the ten largest states, Georgia (+34 bps), Florida (+15 bps) and Illinois (+14 bps) had the largest year-over-year increases. California decreased 16 bps from August 2024, and Pennsylvania dropped 15 bps.

Industry Analysis

Small Business Lending:

• In August 2025, nominal small business lending fell in 10 of the 17 tracked industries month-over-month, holding steady in Real Estate and Rental and Leasing, Health Care and Social Assistance, and Construction.

• 12-month rolling lending activity weakened most month-over-month (-2%) in Information, and Accommodation and Food Services.

• Compared to August 2024, lending rose the most in Arts, Entertainment, and Recreation (+5%), followed by Construction (+2%), Finance and Insurance (+2%), Health Care and Social Assistance (+2%), and Real Estate and Rental and Leasing (+2%). Lending fell in Information (-12%), Accommodation and Food Services (-8%), and Other Services (except Public Administration) (-7%).

Small Business Delinquency and Default:

• In August 2025, the annualized SBDFI rose or held steady month-over-month in 10 of the 17 tracked industries, with the largest increase in Educational Services (+3%).

• From August 2024 to August 2025, the SBDFI increased in 12 of the 17 tracked industries, led by Arts, Entertainment, and Recreation (+26%), Mining, Quarrying, and Oil and Gas Extraction (+17%), and Information (+16%).

• From August 2024 to August 2025, the 31-90 day SBDI increased 2% in the Construction industry. All other segments improved, with Transportation dropping 14% and Agriculture decreasing 9%.

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.

*By population