Over the past 12+ months, starting late in Q1 2020, there have been significant changes in small businesses’ need for funding and how they have been able to satisfy those needs. These factors resulting from impacts of the COVID pandemic, uncertain economic conditions, and various financial assistance programs caused credit trends to change during the last 3 quarters of 2020. The changes in both direction and scale would not have been expected based on trends in periods prior to the pandemic.
In Q1 2021, while there are similar trends when compared to late Q2-early Q3 2020 for both delinquency and credit utilization, the slope of change slowed considerably. This corresponds with the liquidity infusion provided by the Paycheck Protection Program (PPP) and other assistance programs during 2020. The positive impact from these programs on small business payment performance trends continued in early 2021. Any influence from the second wave of PPP funding was not apparent by the end of the first quarter.
The base of the Small Business Lending Trends is data reported to the Small Business Financial Exchange™ (SBFE®). The SBFE Data™ includes information on small businesses and their payment performance on commercial credit accounts contributed by SBFE member organizations. SBFE’s membership includes banks, credit unions, alternative lenders, captive finance companies, independent finance companies, leasing companies and more. The methodology for each metric is included in the narrative for each respective report.
Calculated using the total outstanding balances of all open accounts 30 days or more past due divided by the total outstanding balances of all open accounts reported. Delinquencies are calculated monthly, then averaged quarterly. Delinquency trends also include delinquent accounts in a non-accrual status in order to provide an accurate reflection of all 30+ day delinquent activity and provide insight into the health of small businesses.
Calculated using the outstanding balance of revolving account types divided by the credit limit for those accounts. Utilization is calculated monthly then averaged quarterly.
Calculated using the outstanding balance of revolving account types divided by the credit limit for those accounts. Utilization is calculated monthly then averaged quarterly.
Calculated using the total balances of accounts charged-off during a given month divided by the total outstanding balances of all accounts reported. Charge-offs are calculated monthly then averaged quarterly.