Small Business Lending Increased in July 2024

THE EQUIFAX JULY SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending increased by 9.7% month-over-month and 3.3% year-over-year. The SBLI three-month moving average decreased month-over-month by 1.1% and 2.6% year-over-year.

Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due rose to 1.79% in July 2024, up 2 basis points month-over-month and up 11 basis points from July 2023. The SBDI 91-180 Days Past Due only increased 2 basis points from June to July 2024, from 0.65% to 0.67%. The Small Business Default Index also rose slightly to 3.43%, up 3 basis points month-over-month.

According to the latest report, the Equifax SBLI reading suggests that small business lending continues to be constrained by high interest rates. However, with the Federal Reserve recently cutting rates, optimism is on the rise and there could be an increased appetite among small business owners to expand their operations through borrowing. Small business owners continue to benefit from solid consumer spending growth. However, evidence suggests that spending may slow in the months ahead as consumers pull back on credit card use and consumption levels come back into alignment with disposable income.

Regional Analysis

Small Business Lending:

In July, 26 states had a year-over-year decrease in 12-month rolling lending volumes. Of the ten largest states, five showed a decrease from 2023. Georgia decreased 6.5%, Texas decreased 5%, and Florida dropped 4%. Illinois showed strong growth at +4% year-over-year. Of all states, New Mexico (+14%) and Maine (+11%) had some of the highest growth numbers over last year. West Virginia (-10%), Washington (-9%), Oregon (-8%) , and Mississippi (-7%) posted some of the largest decreases from July 2023.

Month-over-month, 25 states showed decreased nominal lending activity in the preceding 12 months, including six of the ten largest states. Georgia (-3%), Texas (-1%), and Florida (-1%) had the largest decreases of these ten in the 12 month period ending in July 2024 as compared to the 12 month period ending in July 2023.

Small Business Delinquency and Default:

Defaults increased in every state annually and in 37 states month-over-month. Maryland had the smallest increase over last year at +5%, while Minnesota had one of the largest increases at +84% from last year. Georgia (4.69%), Florida (4.54%), Louisiana (4.40%), Texas (4.31%) have the highest overall default rates amongst all states. North Dakota (2.0%) and Minnesota (2.3%) have the lowest. Of all states, Maine and Pennsylvania increased the most since last month at +13% and +11%, respectively. Of the ten largest states, six increased default rates over last month. Ohio increased 3% while Georgia and North Carolina both improved over 3%.

In 31-90 day delinquency, 28 states had an increase in delinquency month-over-month. Delinquency metrics remain elevated with 39 states increasing their delinquency rates from last year (including 8 of the 10 largest states). Florida (2.8%), Nevada (2.8%) and Wyoming (2.6%) have the highest delinquency rates in July 2024, while South Dakota (0.8%) and North Dakota (0.6%) have the lowest. Vermont showed the largest annual increase in delinquency, rising 92 basis points since last July. Of the 10 largest states, California (25 bps) and Texas (19 bps) had the largest year over year increases. Illinois decreased 31-90 days past due rates from July 2023, down 17 bps.

Industry Analysis

Small Business Lending:

• In July 2024, nominal small business lending fell in 6 of the 17 tracked industries month-over-month, holding steady in Healthcare and Social Assistance, Manufacturing, as well as Arts, Entertainment and Recreation.

• 12-month rolling lending activity weakened most month-over-month (-2%) in Educational Services.

• Compared to July 2023, lending rose most in Health Care and Social Assistance (+11%), followed by Construction (+7%). Lending fell in Mining, Quarrying, and Oil and Gas Extraction (-19%); Transportation & Warehousing (-10%) as well as Manufacturing (-9%).

Small Business Delinquency and Default:

• In July 2024, the annualized Small Business Default Index rose or held steady month-to-month in 12 of the 17 tracked industries, with some of the largest increases in Mining, Quarrying, and Oil and Gas Extraction (8%) and Accommodation and Food Services (5%).

• On an annual basis, from July 2023 to July 2024, the Small Business Default Index increased in all 17 tracked industries, led by Mining, Quarrying, and Oil and Gas Extraction (+64%).

• Other large increases include Transportation and Warehousing (+59%) and Accommodation and Food Services (+51%).

• On an annual basis, the 31-90 day Small Business Delinquency Index rose in all tracked industries vs. July 2023, rising most in Transportation (+18%) and Construction (+13%). The 91-180 day Small Business Delinquency Index rose in all tracked industries as compared to last year, led by Transportation (+61%) and Construction (+43%).

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.