Small Business Lending Decreased in May 2024
THE EQUIFAX MAY SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending decreased by 3.6% month-over-month and 5.0% year-over-year. The SBLI three-month moving average decreased month-over-month by 3.0% and 3.6% year-over-year.
Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due reached 1.71% in May 2024, up 1 basis point month-over-month and up 8 basis points from May 2023. The SBDI 91–180 Days Past Due remained steady month-over-month though, at 0.64% in April and May 2024. The Small Business Default Index also rose slightly to 3.28%, up 2 basis points month-over-month.
The business climate remains mixed: with headline inflation falling below 2% on an annualized basis over the last three months, multiple rate cuts this year are back on the table. Reduced consumer spending activity may require small business owners to lower prices though, which could be difficult to do since cost pressures remain elevated.
Regional Analysis
Small Business Lending:
Results are mixed in lending volumes for May 2024, with 28 states experiencing year-over-year increases in Lending. The ten largest states were split as well, with half experiencing an increase in lending over last year and half experiencing a decrease. Texas decreased over 3%, while Georgia dipped 2.5%. Illinois showed strong growth at +4% year-over-year. Of all states, Maine (+23%) and Vermont (+17%) had the highest growth from last year. North Dakota and South Dakota both posted 9% decreases in lending activity, while Oregon (-8%) and Montana (-7%) also decreased.
Month-over-month, 37 states showed decreased nominal lending activity in the preceding 12 months, including seven of the ten largest states. Georgia, California, and Florida all decreased lending activity over 1% from the 12 month period ending in April 2024 to the 12 month period ending in May 2024.
Small Business Delinquency and Default:
Defaults increased in every state annually and in 29 states month-over-month, an improvement in the number from last month. Many states have seen a recent plateau in default rates, though the numbers remain elevated from recent history.
Maryland had the smallest increase over last year at +5%, while Minnesota had the largest increase at +90% from last year. Georgia, Florida, and Texas have the highest overall default rates amongst all states, with each about 4% or higher. North Dakota (1.9%) and Pennsylvania (2.0%) have the lowest. Of all states, Alabama and Wisconsin increased the most over last month, +6% and +5%, respectively. Of the ten largest states, Georgia and California both posted increases, month-over-month, while the others remained flat or decreased slightly.
In 31-90 day delinquency, 17 states had an increase in delinquency month-over-month. Although rates have largely flattened recently, overall delinquency metrics still remain elevated with 37 states increasing their delinquency rates from last year (including 8 of the 10 largest states). Florida (2.8%), Wyoming (2.8%), Nevada (2.6%) and Georgia (2.5%) have the highest delinquency rates in May 2024, while South Dakota (0.7%) and North Dakota (0.6%) have the lowest. Connecticut showed the largest annual increase in delinquency, rising 96 basis points since last May. Of the 10 largest states, California (19 bps) and Texas (16 bps) had the largest year over year increases. Illinois (-20 bps) and New York (-7 bps) improved the most from May 2023.
Industry Analysis
Small Business Lending:
In May 2024, nominal small business lending fell in 15 of the 17 tracked industries, rising slightly in Finance and Insurance (2%) while holding steady in Healthcare and Social Assistance.
12-month rolling lending activity weakened most month-over-month in Information, by 3%.
Compared to May 2023, lending rose most in Health Care and Social Assistance (+14%), followed by Construction (+8%). Lending fell in Mining, Quarrying, and Oil and Gas Extraction (-19%); Information (-16%); and Agriculture as well as Transportation & Warehousing (-10%).
Small Business Delinquency and Default:
In May 2024, the annualized Small Business Default Index rose or held steady month-to-month in 14 of the 17 tracked industries, with some of the largest increases in Wholesale Trade (5%) and Accommodation and Food Services (4%).
On an annual basis, from May 2023 to May 2024, the Small Business Default Index increased in all 17 tracked industries, led by Mining, Quarrying, and Oil and Gas Extraction (+84%).
Other large increases include Transportation and Warehousing (+80%) and Information (+63%).
On an annual basis, the 31-90 day Small Business Delinquency Index rose in all tracked industries vs. May 2023, rising most in Transportation (+25%) and Agriculture (+25%). The 91-180 day Small Business Delinquency Index rose in all tracked industries as compared to last year, led by Transportation (+76%) and Construction (+50%).
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.