Equifax : Small Business Lending Increased in April 2024

THE EQUIFAX APRIL SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending increased by 6.1% month-over-month and 1.9% year-over-year. The SBLI three-month moving average increased slightly month-over-month by 0.5% but experienced a slight dip of just under 1% year-over-year.

Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due remained steady, at 1.6% in April 2024. The SBDI 91-180 Days Past Due decreased 1 basis point month-over-month from 0.64% in March to 0.63% in April. This is the first month-over-month decrease since mid-2022. The Small Business Default Index also rose slightly to 3.2%, up 1 basis point month-over-month.

Core inflation was closer to target in April 2024, after higher readings in Q1. This progress will need to continue for the Fed to consider cutting rates. Consumer demand appears to be weakening, reflecting a slowdown in real disposable income growth over the last year. Boosted by pandemic-era savings and a hot labor market, spending remained strong for longer than many anticipated. In recent months, however, consumers have been more cautious - a trend that is likely to continue.

Regional Analysis

Small Business Lending:

Compared to April 2023, annualized lending volumes were up in 31 states, including four of the ten largest states. Texas decreased over 3%, while Georgia dipped 1%. Illinois showed strong growth at +5% year-over-year. Of all states, Maine (+26%) and Utah (+19%) had the highest growth from last year.

Month-over-month, 27 states showed increased nominal lending activity in the preceding 12 months, including three of the ten largest states. Maine (+10%), Utah (+5%), and Vermont (+3%) showed the largest gains, while Nevada dropped 3% and Oregon 2%. In the ten largest states, Illinois and Georgia dropped about 1% while only New York and Ohio showed very slight gains in lending from March (+0.8% and +0.3%, respectively).

Small Business Delinquency and Default:

Defaults increased in every state annually and in 34 states month-over-month, an improvement in the number from last month. The average increase in default rates by state was 38% and the pace of increase has been slowing.

Kansas had the smallest increase over last year at +1%, while Minnesota had the largest increase at +80% from last year. Georgia, Florida, and Texas have the highest overall default rates amongst all states, with each about 4% or higher. North Dakota and Minnesota have the lowest, each just below 2% annualized default rate. Of all states, Pennsylvania and North Carolina increased the most over last month, +27% and +20%, respectively. Both default rates are the highest since before the Covid-19 Pandemic, but remain below levels from the Great Recession. Although Texas, Florida, and George have the highest overall default rates, all three decreased default rates from March to April 2024, with each decreasing more than 4%.

In 31-90 day delinquency, 12 states (but none of the 10 largest states) had an increase in delinquency month-over-month. This represents a welcome slowdown in the Small Business Delinquency Index. However, overall delinquency metrics still remain elevated with 37 states increasing their delinquency rates from last year (including 7 of the 10 largest states) with the average increase at 33 basis points. Florida (2.9%), Wyoming (2.9%), and Georgia (2.6%) have the highest delinquency rates in April 2024, while South Dakota (0.5%) and North Dakota (0.6%) have the lowest. Connecticut showed the largest annual increase in delinquency, rising 123 basis points since last April. Of the 10 largest states, North Carolina (+21 bps) and Florida (+23 bps) had the largest year over year increases. Illinois (-16 bps) and New York (-11 bps) improved the most from April 2023.

Industry Analysis

Small Business Lending:

• In April 2024, nominal small business lending held steady or rose year-over-year in 8 of the 17 tracked industries.

• 12-month rolling lending activity weakened month-over-month in 9 tracked industries, with Information; Manufacturing; and Accommodation and Food Services; all down 2%.

• Compared to April 2023, lending rose in Health Care and Social Assistance (+14%) and Arts, Entertainment and Recreation (+10%). Lending fell in Mining, Quarrying, and Oil and Gas Extraction (-16%); Information (-12%); and Agriculture (-11%).

Small Business Delinquency and Default:

• In April 2024, the annualized Small Business Default Index rose or held steady in 10 of the 17 tracked industries vs. March 2024, with some of the largest increases in Real Estate, Rental and Leasing (+4%) and Information; Agriculture; and Accommodation and Food Services (all +3%).

• On an annual basis, from April 2023 to April 2024, the Small Business Default Index increased in all 17 tracked industries, led by Transportation and Warehousing (+93%).

• Other large increases include Mining, Quarrying, and Oil and Gas Extraction (+65%) and Retail Trade (+52%).

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

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.