Regional Trends to Watch: Small Business Credit Quality by U.S. Population

In recognition of Small Business Week, we’d like to introduce the new 2024 Market Trends and Predictions Report focusing on the current small business landscape. Below, you'll find a snapshot of credit quality in the most populous states compared to the least populous states.

In 2023, a trend emerged across the United States as every state experienced an uptick in their Small Business Default Index (SBDFI). Particularly noteworthy were the larger-than-average increases observed in California, Texas, Florida, New York, and Georgia — the nation's most populous states. Meanwhile, the Midwest and Pacific Northwest regions saw more modest increases, reflecting the resilience of credit quality in these areas. Notably, states with lower population densities, such as Montana, Wyoming, North and South Dakota, and Alaska, also exhibited smaller-than-average SBDFI hikes, showcasing a trend toward greater stability in less densely populated regions.

Default rates and credit rating downgrades in companies rose at the same time in 2023. This trend lasted into early 2024. Projections suggest it is unlikely to escalate. Recent developments show the close link between economic factors and regional dynamics. They stress the need for tailored approaches to address different credit quality challenges across states. As lenders and service providers navigate, a nuanced understanding of state-level trends is essential for informed decision-making and effective support for small businesses.

For more insights around the small business marketplace check out the Market Pulse webinar page. To learn from our panel of experts in real-time, join us for our monthly Market Pulse webinar. And don’t miss out on our first blog in this series where we discuss regional small business trends. Stay tuned for part three, where we dive into default and delinquency rates.