Business Lending Index

Key Takeaways

• The SBLI measures new loans issued to small businesses monthly.
• It acts as a leading economic indicator, reflecting changes in GDP.
• The index is available by state and industry, covering 18 sectors.
• SBLI helps understand small business impacts on the U.S. economy.
• PayNet also constructs the Small Business Delinquency Index (SBDI).

What Is the Small Business Lending Index (SBLI)?

The Small Business Lending Index (SBLI), published by PayNet, an Equifax subsidiary, tracks new small business loans made over the past 30 days. Using data from major commercial and industrial lenders, it serves as a leading indicator for economic growth and GDP shifts, with state and industry detail across 988 indices.1

Understanding the Small Business Lending Index (SBLI)

The Small Business Lending Index (SBLI) utilizes PayNet's database of loans and leases from the largest commercial and industrial loan providers to measure the volume of small business loans issued over the past 30 days.1

Understanding the actions of small businesses, as well as their success and failure, is a key to understanding the success of the U.S. economy.2

The SBLI measures the loan activity of these small businesses. Loans are used for a variety of purposes, such as for growth, expansion, paying down debts, and a host of other needs. For this reason, the SBLI is an indicator of GDP. According to PayNet, because small businesses are more sensitive to changes in the economy, the SBLI serves as an indicator of macroeconomic industry trends.1

How the Small Business Lending Index (SBLI) Is Constructed

According to PayNet, the index is segmented into 988 indices at the national, state, and industry levels which are formulated on a rolling 12-month basis due to the volatility of smaller sample sizes.1

The index is published monthly in three phases as follows:

PRELIMINARY: current month data reflecting most recent small business lending activity released

REVISED: data for the month preceding Preliminary release

FINAL: data for the month preceding Revised release

In its Strategic Insights report, PayNet discusses the SBLI index and the insights that it provides on the economy. It provides insight into regional trends as well as industry trends. In discussing regional trends, the section covers loan activity in specific states, usually referencing the 10 largest states.3

The industry section covers 18 industries and discusses the specific ones that have seen the greatest change in loan origination. Industries included are agriculture, construction, professional services, healthcare, mining, quarrying, and oil and gas.

It also provides an economic context of all of the information, discussing economic growth and factors in the economy that could have impacted the index. The SBLI is available as a standalone graph as well that can be filtered by state and industry, providing a significant amount of granular detail.1

Comparing the Small Business Lending Index (SBLI) and Small Business Delinquency Index (SBDI)

PayNet also constructs the closely-related Small Business Delinquency Index (SBDI), which measures loan delinquencies by 31-90, 91-180, and 30-180 days.

It is like the Small Business Lending Index (SBLI), but also measures small business financial stress and default risk, provides early warnings of future insolvency, and serves as a leading indicator of changes in unemployment rates on both the national level and for some U.S. states.

According to PayNet, "it provides insight to financial services executives, economists, policymakers, and regulators in order to understand the stage of the business cycle and to set credit oversight policies."4

Utilizing both indexes together in analysis can provide a strong understanding of the financial health of the economy, where the economy is heading in terms of booms or recessions, as well as the specific industries that are performing poorly or well.