Small Business Lending Increased in October 2024
THE EQUIFAX OCTOBER SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending increased by 11.4% month-over-month and 1.6% year-over-year. The SBLI three-month moving average held steady month-over-month and decreased by 6.2% year-over-year.
Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due dropped slightly to 1.82% in October 2024, down 1 basis point month-over-month and up 12 basis points from October 2023. The SBDI 91–180 Days Past Due remained the same from September to October 2024, staying at 0.70%. The Small Business Default Index also fell in October, down 5 basis points month-over-month to 3.40%.
According to the latest report, the Equifax SBLI suggests that small business lending activity improved 11.4% M/M in October, although growth in the SBLI’s three-month moving average was flat. Meanwhile, small business defaults fell for the first time in 2.5 years, while short-term delinquencies also ticked down. Evidence suggests that the combination of a healthy labor market, rising household wealth, and resilient consumer spending has put the U.S. economy on solid footing, and business and consumer confidence appear to be on the rise. Combined with falling interest rates and a strong holiday shopping season, Main Street could get off to a healthy start in 2025.
Regional Analysis
Small Business Lending:
In October, 32 states had a year-over-year decrease in 12-month rolling lending volumes. Of the ten largest states, six showed a decrease from 2023. Georgia decreased 10%, Texas decreased 6%, and California dropped 6% as well. Illinois had the largest growth at 2% year-over-year. Of all states, South Carolina (+12%) and New Mexico (+9%) had some of the highest growth numbers over last year. Nevada (-13%), Washington (-11%), and Arkansas (-10%) posted some of the largest decreases from October 2023.
Month-over-month, 22 states showed decreased nominal lending activity in the preceding 12 months, including five of the ten largest states. California (-1.3%) and Florida (-0.7%) had the largest decreases of these ten in the 12 month period ended in October 2024 as compared to the 12 month period ended in October 2023.
Small Business Delinquency and Default:
Defaults increased in 49 states annually and in 12 states month-over-month. New Jersey improved by 6% while Minnesota increased 71% from the prior year. Florida (4.5%), Hawaii (4.3%) and Louisiana (4.3%) had the highest overall default rates amongst all states. North Dakota (2.0%) and Pennsylvania (2.3%) had the lowest. Of all states, Virginia increased the most from last month at +5%. Of the ten largest states, all decreased default rates from last month but increased versus last year. Month-over-month, New York and Illinois both improved about 6%.
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 8 of the 10 largest states). Florida (2.9%), Georgia (2.6%), and Alabama (2.5%) have the highest delinquency rates in October 2024, while South Dakota (0.5%) and North Dakota (0.8%) have the lowest. Montana showed the largest annual increase in delinquency, rising 129 basis points since last October. Of the 10 largest states, New York (23 bps) had the largest year over year increase. Georgia decreased 31-90 days past due rates from October 2023, down 21 bps.
Industry Analysis
Small Business Lending:
In October 2024, nominal small business lending fell in 13 of the 17 tracked industries month-over-month, declining by over 10% in four industries.
12-month rolling lending activity weakened most month-over-month (-11%) in Information and Manufacturing as well as -10% in Real Estate and Rental and Leasing.
Compared to October 2023, lending rose most in Health Care and Social Assistance (+9%), followed by Finance and Insurance (+3%).
Small Business Delinquency and Default:
In October 2024, the annualized Small Business Default Index rose or held steady month-to-month in 9 of the 17 tracked industries, with some of the largest increases in Mining, Quarrying, and Oil and Gas Extraction (7%) and Arts, Entertainment, and Recreation (+4%)..
On an annual basis, from October 2023 to October 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 Wholesale Trade (+40%) and Accommodation and Food Services (+39%).
On an annual basis, the 31-90 day SBDI rose in all tracked industries except Agriculture versus October 2023. Construction rose 14% while Agriculture dipped 3%. The 91-180 day SBDI rose in all tracked industries as compared to last year, led by Agriculture and Construction, both up 35%.
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.