Small Business Lending Increased in July 2025

THE EQUIFAX JULY SMALL BUSINESS LENDING INDEX (SBLI) showed that nominal small business lending increased 9.2% month-over-month (but decreased 0.8% year-over-year). The SBLI three-month moving average increased 1.9% month-over-month but decreased 2.3% year-over-year.

Meanwhile, the Equifax Small Business Delinquency Index (SBDI) 31-90 Days Past Due decreased slightly to 1.75% in July 2025, up zero basis points month-over-month. The SBDI decreased five basis points year-over-year. The SBDI 91-180 Days Past Due remained steady (1 bp) at 0.71% from June 2025 to July 2025. The Small Business Default Index (SBDFI) increased slightly to 3.31% and was up one basis points month-over-month.

Portfolio quality continues to improve modestly: both short-term and long-term delinquencies are stable, and defaults are down 11 basis points compared to last year. Recent data suggests that core inflation continues to build, and small business owners are increasingly facing the choice of either raising prices to cover tariff-related costs or absorbing the costs to remain competitive. Early evidence suggests that costs are increasingly being borne by consumers. This trend, along with weaker labor market conditions, took center-stage at the Fed’s September meeting.

Regional Analysis

Small Business Lending:

In July, 27 states had a year-over-year increase in 12-month rolling lending volumes. Of the ten largest states, four showed a decrease from 2024. California decreased 11%, Georgia decreased 1%, Florida decreased 1%, and New York dropped <1%. Illinois showed 6% growth from last year while Michigan grew 3%. Of all states, Iowa (+11%), North Dakota (+10%) and New Hampshire (+9%) had some of the highest growth numbers from last year. California (-11%) posted the largest decrease from July 2024 of all states.

Month-over-month, nominal lending activity was down in 31 states in the preceding 12 months, including seven of the ten largest states. Georgia (+2%) and North Carolina (+1%) increased slightly in the 12-month period ended in July 2025 as compared to the 12-month period ended in July 2024. California dropped the most, showing -1.4% in lending volumes month-over-month.

Small Business Delinquency and Default:

Defaults decreased in 35 states annually and decreased in 25 states month-over-month. Year-over-year, New York improved 30%, while West Virginia had the largest default rate increase, jumping 22%. Florida (4.5%), Texas (4.5%) and Louisiana (4.2%) had the highest overall default rates amongst all states. North Dakota (1.9%), Iowa (2.2%), and Nebraska (2.3%) had the lowest. Of the ten largest states, four states increased default rates month-over-month: Texas (+3.0%), Georgia (+3.0%), California (+1.3%) and Illinois (+0.7%). The remaining states decreased default rates over June 2025, led by New York which dropped by almost 3% this month.

In 31-90 day delinquency, 32 states had a decrease in delinquency month-over-month. Wyoming (3.8%), Florida (2.9%), Georgia (2.6%) and Connecticut (2.5%) had the highest delinquency rates in July 2025, while South Dakota (1.0%), Ohio (1.1%) and Minnesota (1.1%) had the lowest. Wyoming showed the largest annual increase in delinquency, rising 120 basis points since last July. Of the ten largest states, Georgia (+20 bps), Michigan (+17 bps) and Illinois (+10 bps) had the largest year-over-year increases. North Carolina decreased 20 bps from July 2024, and California dropped 14 bps.

Industry Analysis

Small Business Lending:

• In July 2025, nominal small business lending fell in ten of the 17 tracked industries month-over-month, holding steady in Manufacturing, Finance and Insurance, and Construction.

• 12-month rolling lending activity weakened most month-over-month (-4%) in Information.

• Compared to July 2024, lending rose most in Arts, Entertainment, and Recreation (+7%), followed by Educational Services (+3%). Lending fell in Information (-11%), Accommodation and Food Services (-7%), and Other Services (except Public Administration) (-7%).

Small Business Delinquency and Default:

• In July 2025, the annualized SBDFI rose or held steady month-to-month in eight of the 17 tracked industries, with the largest increase in Finance and Insurance (+6%).

• On an annual basis, from July 2024 to July 2025, the SBDFI increased in nine of the 17 tracked industries, led by Arts, Entertainment, and Recreation (+24%), Mining, Quarrying, and Oil and Gas Extraction (+24%), and Information (+18%).

• On an annual basis, the 31-90 day SBDI increased 2% in the Construction industry vs. July 2024. All other segments improved, with Transportation dropping 15% from last year and Health Care decreasing 8%.

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.

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Disclaimer

Equifax Inc. published this content on September 19, 2025, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on September 19, 2025 at 08:18 UTC.