Small Business Lending Decreased in January 2025

THE EQUIFAX JANUARY SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending decreased by 1.3% month-over-month and 0.5% year-over-year. The SBLI three-month moving average increased slightly month-over-month by 0.1% and increased 0.5% year-over-year.

Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due decreased slightly to 1.70% in January 2025, down four basis points month-over-month and down three basis points from January 2024. The SBDI 91–180 Days Past Due remained steady at 0.69% from December 2024 to January 2025. The SBDI also remained steady at 3.37% and was down one basis point month-over-month. 

According to the latest report, the Equifax SBLI suggests that small business lending activity is generally holding up, while delinquency and default rates are trending down. Further, the labor market remains healthy even though job growth has slowed, and while consumer spending has weakened somewhat in Q1, it remains above water, largely due to higher-income households. However, evidence suggests uncertainty is unusually high, largely due to the increasingly likely possibility of broad-based tariffs targeting major U.S. trading partners. While some industries may benefit, trade policy disruptions are already disrupting economic growth projections and can be at least partly to blame for recent declines in both consumer and business confidence.

Regional Analysis

Small Business Lending:

In January, 30 states had a year-over-year decrease in 12-month rolling lending volumes. Of the ten largest states, five showed a decrease from 2024. Georgia and California both decreased 10%, Florida decreased 4%, and Texas dropped 3%. Illinois showed 5% growth from last year while Ohio grew 4%. Of all states, North Dakota (+16%), South Dakota (+14%) and South Carolina (+14%) had some of the highest growth numbers over last year. Nevada (-14%) and Wyoming (-11%) posted some of the largest decreases from January 2024.

Month-over-month, nominal lending activity was up in 37 states in the preceding 12 months, including six of the ten largest states. Pennsylvania had the largest decrease (-0.4%) of these ten in the 12-month period ended in January 2025 as compared to the 12-month period ended in January 2024. New York grew the most, +1% over last month.

Small Business Delinquency and Default:

Defaults increased in 44 states annually and in 22 states month-over-month. Year-over-year, Georgia improved nearly 15%, while Maine had the largest default rate increase, jumping 61%. Hawaii (4.1%), California (4.1%), West Virginia (4.0%), and Georgia (4.0%) had the highest overall default rates amongst all states. North Dakota (1.9%), Iowa (2.3%) and South Dakota (2.4%) had the lowest. Of all states, Maine increased the most from last month at +15%. Of the ten largest states, only one increased default rates over last month (Pennsylvania ticked up less than 1%). Illinois  improved from last month by 4.7%, while New York improved by 3.9%.

In 31-90 day delinquency, 20 states had an increase in delinquency month-over-month. Delinquency metrics remain elevated but are turning the corner and improving, with 30 states increasing their delinquency rates from last year (including just three of the ten largest states). Florida (3.0%), Georgia (2.8%) and Alabama (2.7%) have the highest delinquency rates in January 2025, while South Dakota (0.5%), Delaware (1.1%)  and Ohio (1.1%) have the lowest. Vermont showed the largest annual increase in delinquency, rising 105 basis points since last January. Of the ten largest states, California (seven bps) and New York (4 bps) had the largest year-over-year increases. Florida decreased 25 bps from January 2024, North Carolina decreased 24 bps and Georgia decreased 10 bps.

Industry Analysis

Small Business Lending: 

• In January 2025, nominal small business lending fell in three of the 17 tracked industries month-over-month, holding steady in Transportation and Warehousing, Accommodation and Food Services, Retail Trade, and Construction.

• 12-month rolling lending activity weakened most month-over-month (-4%) in Mining, Quarrying, and Oil and Gas Extraction.

• Compared to January 2024, lending rose most in Arts, Entertainment, and Recreation (+7%), followed by Health Care and Social Assistance (+6%), followed by Construction (+2%). Lending fell in Mining, Quarrying, and Oil and Gas Extraction (-11%); Manufacturing (-9%) as well as Transportation and Warehousing (-7%).

Small Business Delinquency and Default:

• In January 2025, the annualized SBDI rose or held steady month-to-month in five of the 17 tracked industries, with some of the largest increases in Educational Services (6%) and Arts, Entertainment, and Recreation (6%).

• On an annual basis, from January 2024 to January 2025, the SBDI increased in 15 of the 17 tracked industries, led by Mining, Quarrying, and Oil and Gas Extraction (+53%). 

• Other large increases include Wholesale Trade (+29%) and Agriculture, Forestry, Fishing and Hunting (+27%).  

• On an annual basis, the 31-90 day SBDI increased in two industries vs. January 2024. Construction rose 6% while Retail rose 1%.  Agriculture (-13%), Transportation (-12%), Health Care (-6%) and General (-2%) all showed improvement from last year. 

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.