Small business optimism is rising to a historic high, but economic uncertainty continues to present risks. With unemployment down and rate cuts in a holding pattern, the Experian Commercial Pulse Report (Feb 11, 2025) provides a comprehensive snapshot of the macroeconomic environment and small business credit trends—essential insights for lenders, risk officers, and businesses balancing growth and risk.
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Consumer confidence slips while small businesses are more hopeful
When we think about sentiment in the economy, we see a divergence. Consumer sentiment fell to 71.1 in January, down from 74.0 in December and 10% lower than a year ago. This suggests that consumers may be more cautious about spending. Small business optimism, however, surged to 105.1 in December, up from 101.7 in November. This is the highest level since October 2018, signaling that despite economic uncertainty, small businesses remain hopeful about future conditions.
Introducing the Experian Small Business Index
With an economy as dynamic as this one, small business risk can shift in an instant. To help risk professionals, lenders, and business leaders stay ahead, we have launched the Experian Small Business Index™—a comprehensive, data-driven tool that tracks the financial health of small business owners and their businesses across the U.S. on a monthly basis. Experian trained the model for the index on data dating back to 2006. In this week’s Commercial Pulse report, we talk about how the index has evolved since the pandemic and what opportunities it reveals.
Experian Commercial Pulse Report – Business owners with unpaid student loans carry a higher risk for lenders.
As temperatures rise across the U.S., so does the nation’s appetite for travel—and the Leisure & Hospitality sector is feeling the heat. In this week's Commercial Pulse Report, we examine how soaring consumer demand intersects with evolving credit conditions for businesses in travel, lodging, and transportation. Travel Rebounds, But the Story Is Mixed By every measure, Americans are traveling in droves. AAA projected over 72 million domestic travelers over the July 4th holiday—setting a record. Meanwhile, Memorial Day travel surged across all transportation types, especially road trips, which saw a 3.0% year-over-year increase. However, despite six new TSA checkpoint records in June, major airlines have cut forward-looking forecasts, signaling a notable shift: travelers are increasingly opting for alternatives like road and rail over the skies. This change in travel behavior has direct implications for how different business subsectors access and manage credit. Infrastructure Drives Commercial Credit Trends The Leisure & Hospitality industry is broad and fragmented—from mega-airlines and hotel chains to small sightseeing operators and independent RV campgrounds. This diversity is reflected in commercial credit data. Businesses with heavy infrastructure needs—like airlines and hotels—tend to carry higher loan and credit line balances. Airlines, in particular, average the highest number of commercial trades, a reflection of their large-scale operations and capital intensity. Hotels also hold sizeable credit, but with a twist. While revenues have rebounded beyond pre-pandemic levels, occupancy rates remain flat due to an increase in room supply from new construction. The hotel pipeline stood at 6,211 projects with over 722,000 rooms as of Q3 2024, signaling sustained investment even amid margin pressures. Rental Cars: High Volume, Higher Risk The rental car sector stands out—but not in a good way. Despite being a key enabler of domestic travel, these businesses exhibit the highest commercial credit risk across the industry. According to Experian’s Commercial Risk Classification, 32% of rental car companies are considered Medium-High to High Risk, compared to less than 10% in categories like air transport and sightseeing. The elevated risk may be due to a combination of factors: fleet acquisition costs, multi-location exposure, and operational disruptions during the pandemic. While credit trades in this segment remain high, inquiries have declined over recent years, possibly reflecting tightening lending standards or constrained demand for new credit. Encouraging Risk Trends—With Exceptions Across the broader Leisure & Hospitality industry, there’s been a decline in commercial credit risk since 2020. The share of businesses classified as Medium-High or High Risk dropped from 11.7% to 8.5% as of April 2025. Most firms now fall into the Medium Risk category—a sign of normalization in the sector. Delinquency rates remain low (under 1%), and the average Intelliscore Plus v2 score has remained stable across most subsectors. Still, credit conditions vary sharply by business type, underlining the importance of nuanced risk assessment in portfolio management. Smarter Credit Allocation Starts with Subsector-Level Insight The summer travel surge is a powerful reminder of the sector’s resilience—but not all players are experiencing the boom equally. For credit professionals and commercial lenders, the latest data from Experian suggests a growing divide: infrastructure-heavy firms are leaning into credit, while high-risk subsectors like rental cars may warrant closer scrutiny. Whether your clients are in air transport or roadside accommodations, understanding these credit trends will be key to navigating the second half of 2025. ✔ Visit our Commercial Insights Hub for in-depth reports and expert analysis. ✔ Subscribe to our YouTube channel for regular updates on small business trends. ✔ Connect with your Experian account team to explore how data-driven insights can help your business grow. Download the Commercial Pulse Report Visit Commercial Insights Hub Related Posts
Experian’s latest Commercial Pulse Report reveals rising car prices drive demand for used vehicles as commercial credit lines for b2b decline
