Equifax’s August report of their small business indices showed that small business lending is holding up in the current economic climate. The Equifax Small Business Lending Index (SBLI) fell almost 2% in June. Though the month-over-month change was negative, the SBLI rose 5.2% from June 2022 showing an overall positive position. Small business lending is still on the upswing, the growth has simply slowed down.
Small business lending grew in eight out of ten of the largest states. The increase was led by Michigan, Illinois, and North Carolina. Michigan and North Carolina reached all-time highs according to the report. Though small business lending dropped in Georgia and California, it was an insignificant decline of less than 0.1%. Reviewing the year-over-year growth, California was the only large state that decreased in small business lending activity (down 0.5%).
Many of the industries tracked in the SBLI increased in June (12 out of 18), and compared to the year before, small business lending in 14 out of 18 industries improved. One of the most notable industries was Arts, Entertainment, & Recreation for its month-over-month (+2.1%) and year-over-year growth (+36%). On the other side of the coin, the Information industry dropped 4.3% from May, and Transportation & Warehousing is down 11.7% from June 2022.
Equifax’s Small Business Delinquency Index (SBDI) and Small Business Default Index (SBDFI) also elevated in June. The SBDI for small business loans 31 to 90 days past day was at 1.67% in June, and loans 91 to 180 days past due were at 0.49%. June’s SBDFI reading was 2.56% and is consistently climbing.
On a monthly and annual basis, the six industries Equifax tracks for delinquencies all increased. Monthly and annually, the Transportation industry has the most significant rise in delinquencies. Transportation was also at the head of the growth in small business loan defaults. Of the 18 tracked industries for defaults, the SBDFI increased in 13 industries. Defaults in all 18 industries are up compared to June 2022.
Source:
Equifax Commercial Strategic Insights: August 2023
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