Small Business Lending Decreased in September 2024
THE EQUIFAX SEPTEMBER SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending decreased by 6.2% month-over-month and 11.2% year-over-year. The SBLI three-month moving average decreased month-over-month by 0.3% and 5.1% year-over-year.
Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due rose to 1.82% in September 2024, up 1 basis point month-over-month and up 13 basis points from September 2023. The SBDI 91–180 Days Past Due only increased 2 basis points from August to September 2024, from 0.68% to 0.70%. The Small Business Default Index also rose slightly to 3.46%, up 2 basis points month-over-month.
According to the latest report, the Equifax SBLI suggests that small business lending activity decreased in September. The three-month-moving-average decreased for the fifth consecutive month (-0.3% M/M; -5.1% Y/Y) as small business owners maintain a risk-off posture amid high economic uncertainty. Evidence suggests that a major strike and two destructive hurricanes led to weak employment growth in October, though these effects are likely to be temporary. Small business lending prospects are unlikely to improve materially in Q4, but with borrowing costs declining and inflationary pressures remaining in check, Main Street could be poised for lending growth in 2025.
Regional Analysis
Small Business Lending:
In September, 33 states had a year-over-year decrease in 12-month rolling lending volumes. Of the ten largest states, eight showed a decrease from 2023. Georgia decreased 9%, Texas decreased 6%, and Florida dropped 6% as well. New York and Ohio both showed over 2% growth from last year. Of all states, New Mexico (+12%) and Vermont (+12%) had some of the highest growth numbers over last year. Montana (-14%), Nevada (-10%), and Washington (-10%) posted some of the largest decreases from September 2023.
Month-over-month, 40 states showed decreased nominal lending activity in the preceding 12 months, including eight of the ten largest states. California (-1.8%), New York (-1.6%), and Georgia (-1.5%) had the largest decreases of these ten in the 12 month period ended in September 2024 as compared to the 12 month period ended in September 2023.
Small Business Delinquency and Default:
Defaults increased in 49 states annually and in 25 states month-over-month. New Jersey improved by less than 1% while Minnesota had the highest increase at +79% . Florida (4.5%), Georgia (4.4%), and Louisiana (4.3%) had the highest overall default rates amongst all states. North Dakota (2.0%) and Pennsylvania (2.34%) had the lowest. Of all states, Massachusetts increased the most from last month at +8%. Of the ten largest states, four increased default rates over last month. Ohio increased 2% and California increased 1% while Illinois and Georgia improved around 3%.
In 31-90 day delinquency, 26 states had an increase in delinquency month-over-month. Delinquency metrics remain elevated with 38 states increasing their delinquency rates from last year (including 9 of the 10 largest states). Florida (2.8%), Nevada (2.6%) and Alabama (2.5%) have the highest delinquency rates in September 2024, while South Dakota (0.7%) and North Dakota (0.6%) have the lowest. Montana showed the largest annual increase in delinquency, rising 123 basis points since last September. Of the 10 largest states, New York (22 bps) and Texas (19 bps) had the largest year over year increases. Georgia decreased 31-90 days past due rates from September 2023, down 21 bps.
Industry Analysis
Small Business Lending:
In September 2024, nominal small business lending fell in 12 of the 17 tracked industries month-over-month, holding steady in Finance and Insurance, Construction, as well as Arts, Entertainment, and Recreation.
12-month rolling lending activity weakened most month-over-month (-4%) in Information.
Compared to September 2023, lending rose most in Health Care and Social Assistance (+8%), followed by Construction and Arts, Entertainment, and Recreation (+4%). Lending fell in Mining, Quarrying, and Oil and Gas Extraction (-19%); Information (-11%) as well as Manufacturing (-11%).
Small Business Delinquency and Default:
In September 2024, the annualized Small Business Default Index rose or held steady month-to-month in 13 of the 17 tracked industries, with some of the largest increases in Mining, Quarrying, and Oil and Gas Extraction (4%) and Wholesale Trade (4%).
On an annual basis, from September 2023 to September 2024, the Small Business Default Index increased in all 17 tracked industries, led by Mining, Quarrying, and Oil and Gas Extraction (+68%).
Other large increases include Wholesale Trade (+56%) and Accommodation and Food Services (+45%).
On an annual basis, the 31-90 day SBDI rose in all tracked industries vs. September 2023, rising most in Construction (16%) and Retail (13%). The 91-180 day SBDI rose in all tracked industries as compared to last year, led by Transportation (+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.