Small Business Lending Decreased in August 2024
THE EQUIFAX AUGUST SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending decreased by 4.5% month-over-month and 9.5% year-over-year. The SBLI three-month moving average decreased month-over-month by 2.4% and 4.6% year-over-year.
Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due rose to 1.81% in August 2024, up 1 basis point month-over-month and up 14 basis points from August 2023. The SBDI 91–180 Days Past Due only increased 2 basis points from July to August 2024, from 0.66% to 0.68%. The Small Business Default Index also rose slightly to 3.46%, up 3 basis points month-over-month.
According to the latest report, the Equifax SBLI suggests that small business lending activity was dampened again in August. The Federal Reserve’s decision to lower interest rates by 50 basis points in September — with additional cuts likely on the way — could provide a boost to lending activity, though, perhaps, not until next year. In the face of rising uncertainty, evidence suggests that small business owners have adopted a “risk-off” posture that has likely held back lending activity in recent months. However, unease surrounding the labor market, geopolitical conflict, and the 2024 election could be tempered by the strong September labor report and an upwards revision to consumer disposable income.
Regional Analysis
Small Business Lending:
In August, 30 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 8%, Texas decreased 6%, and Florida dropped 5%. New York and Ohio both showed over 2% growth from last year. Of all states, New Mexico (+14%) and Vermont (+13%) had some of the highest growth numbers over last year. Washington (-10%), Colorado(-8%), and Mississippi (-8%) posted some of the largest decreases from August 2023.
Month-over-month, 37 states showed decreased nominal lending activity in the preceding 12 months, including eight of the ten largest states. Florida (-2%), Georgia (-2%) and California (-1%) had the largest decreases of these ten in the 12 month period ended in August 2024 as compared to the 12 month period ended in August 2023.
Small Business Delinquency and Default:
Defaults increased in every state annually and in 29 states month-over-month. New Jersey had the smallest increase over last year at +5%, while Minnesota had the largest increase at +85% from last year. Florida (4.62%), Georgia (4.52%), and Louisiana (4.51%) had the highest overall default rates amongst all states. North Dakota (2.03%) and Minnesota (2.35%) had the lowest. Of all states, Maine increased the most from last month at +9%. Of the ten largest states, five increased default rates over last month. Michigan increased 4% and Pennsylvania increased 3% while Georgia and New York both improved over 3%.
In 31-90 day delinquency, 27 states had an increase in delinquency month-over-month. Delinquency metrics remain elevated with 38 states increasing their delinquency rates from last year (including 8 of the 10 largest states). Florida (2.8%), Nevada (2.6%) and Alabama (2.40%) have the highest delinquency rates in August 2024, while South Dakota (0.7%) and North Dakota (0.6%) have the lowest. Montana showed the largest annual increase in delinquency, rising 119 basis points since last August. Of the 10 largest states, California (25 bps) and Texas (24 bps) had the largest year over year increases. Illinois decreased 31-90 days past due rates from August 2023, down 20 bps.
Industry Analysis
Small Business Lending:
In August 2024, nominal small business lending fell in 11 of the 17 tracked industries month-over-month, holding steady in Wholesale Trade, Manufacturing, as well as Professional, Scientific, and Technical Services.
12-month rolling lending activity weakened most month-over-month (-3%) in Real Estate and Rental and Leasing.
Compared to August 2023, lending rose most in Health Care and Social Assistance (+9%), followed by Finance and Insurance (+4%). Lending fell in Mining, Quarrying, and Oil and Gas Extraction (-20%); Transportation & Warehousing (-10%) as well as Manufacturing (-10%).
Small Business Delinquency and Default:
In August 2024, the annualized Small Business Default Index rose or held steady month-to-month in 11 of the 17 tracked industries, with some of the largest increases in Manufacturing (5%) and Wholesale Trade (3%).
On an annual basis, from August 2023 to August 2024, the Small Business Default Index increased in all 17 tracked industries, led by Mining, Quarrying, and Oil and Gas Extraction (+62%).
Other large increases include Wholesale Trade (+56%) and Accommodation and Food Services (+48%).
On an annual basis, the 31-90 day SBDI rose in all tracked industries vs. August 2023, rising most in Transportation (+15%) and Construction (+16%). The 91-180 day SBDI rose in all tracked industries as compared to last year, led by Transportation (+51%) and Construction (+42%).
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.