THE EQUIFAX JUNE SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending decreased by 13.0% month-over-month and 11.6% year-over-year. The SBLI three-month moving average decreased month-over-month by 2.5% and 3.8% year-over-year.

Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due reached 1.79% in June 2024, up 8 basis points month-over-month and up 12 basis points from June 2023. The SBDI 91-180 Days Past Due only increased 1 basis point month-over-month though, to 0.65%. The Small Business Default Index also rose slightly to 3.34%, up 3 basis points month-over-month.

According to the report, July's labor market report sparked global concerns about a weakening U.S. economy and increased risks of a near-term recession after the "Sahm rule" was triggered. However, both layoffs and unemployment are considered low by historical standards, while real disposable income and consumer spending are consistent with a soft landing. Additionally, while the latest Equifax SBLI reading points to softness in lending activity, expectations for multiple rate cuts may kickstart lending activity later this year.

Regional Analysis

Small Business Lending:

In June, 32 states had a year-over-year decrease in 12-month rolling lending volumes. Of the ten largest states, seven showed a decrease from 2023. Texas decreased 5%, while Georgia, Michigan, and California all saw decreases of 3% or more. Illinois showed strong growth at +3% year-over-year. Of all states, Maine (+14%) and Vermont (+15%) had the highest growth from last year. West Virginia (-11%), Washington (-9%), Mississippi (-8%), and Oregon (-7%) posted some of the largest decreases from June 2023.

Month-over-month, 44 states showed decreased nominal lending activity in the preceding 12 months, including all of the ten largest states. Georgia (-2%), Texas (-2%), and California (-1%) had the largest decreases of these ten in the 12 month period ending in May 2024 as compared to the 12 month period ending in June 2024.

Small Business Delinquency and Default:

Default:

• Defaults increased in every state annually and in 37 states month-over-month. Kansas had the smallest increase over last year at +3.5%, while Minnesota had one of the largest increases at +73% from last year. Florida (4.41%), Texas (4.22%), Hawaii (4.12%), and California (3.99%) have the highest overall default rates amongst all states. North Dakota (1.9%) and Pennsylvania (2.1%) have the lowest. Of all states, Louisiana and Massachusetts increased the most over last month, +5.0% and +4.9%, respectively.
• Of the ten largest states, six increased default rates over last month. Ohio increased 4.1% and California 2.4%. Georgia decreased 2.4% and Florida decreased 2.2% from May 2024.

Delinquency:

• In 31-90 day delinquency, 34 states had an increase in delinquency month-over-month. Although rates have largely flattened recently, they have started to resume an upward trend and overall delinquency metrics remain elevated with 38 states increasing their delinquency rates from last year (including 9 of the 10 largest states).
• Florida (2.9%), Wyoming (2.8%), Nevada (2.6%) and Georgia (2.4%) have the highest delinquency rates in June 2024, while South Dakota (0.7%) and North Dakota (0.6%) have the lowest. Connecticut showed the largest annual increase in delinquency, rising 81 basis points since last June.
• Of the 10 largest states, California (24 bps) and Florida (17 bps) had the largest year over year increases. Illinois decreased 31-90 days past due rates from June 2023, down 18 bps.

Industry Analysis

Small Business Lending:

• In June 2024, nominal small business lending fell in 15 of the 17 tracked industries, holding steady in Healthcare and Social Assistance as well as Arts, Entertainment and Recreation.

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

• Compared to June 2023, lending rose most in Health Care and Social Assistance (+12%), followed by Construction (+7%). Lending fell in Mining, Quarrying, and Oil and Gas Extraction (-21%); Information (-13%); and Agriculture as well as Transportation & Warehousing (-11%).

Small Business Delinquency and Default:

• In June 2024, the annualized Small Business Default Index rose or held steady month-to-month in 13 of the 17 tracked industries, with some of the largest increases in Real Estate and Rental (5%) and Accommodation and Food Services (3%).

• On an annual basis, from June 2023 to June 2024, the Small Business Default Index increased in all 17 tracked industries, led by Transportation and Warehousing (+69%).

• Other large increases include Mining, Quarrying, and Oil and Gas Extraction (+56%) and Wholesale Trade (+52%).

• On an annual basis, the 31-90 day Small Business Delinquency Index rose in all tracked industries vs. June 2023, rising most in Transportation (+25%) and Agriculture (+24%). The 91-180 day Small Business Delinquency Index rose in all tracked industries as compared to last year, led by Transportation (+68%) and Construction (+47%).

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.

Public link

Please use the above public link if you want to share this noodl on another website.