The Commercial Pulse Report | 2/25/2025
The latest Experian Commercial Pulse Report provides a snapshot of the evolving U.S. economic landscape, highlighting key macroeconomic trends and the growing impact of minority-owned businesses. As inflation persists and credit markets tighten, small businesses are navigating a complex financial environment. However, within this challenge lies a significant opportunity—supporting minority-owned businesses, a rapidly expanding sector generating over $2 trillion in annual revenue.
Watch Our Commercial Pulse Update
Macroeconomic Highlights: Inflation, Employment, and Consumer Trends
- Inflation and Interest Rates – Inflation remains a key concern for small businesses, rising to 3.0% in January, marking the fourth consecutive monthly increase and the highest level since June 2024. Core inflation, which excludes food and energy, also increased to 3.3%, signaling persistent pricing pressures across industries. Rent inflation showed some relief, dropping to 4.4%, but food inflation remained high at 2.5%, while energy inflation increased for the first time in six months.
- Employment and Wages – The U.S. labor market is showing mixed signals. The unemployment rate stands at 4.0%, slightly down from December, yet job creation has slowed dramatically. Only 143,000 jobs were added in January, a significant drop from 307,000 in December, marking the weakest growth in three months. At the same time, wages have risen to $30.84 per hour, which may contribute to inflationary pressures for businesses.
- Consumer Spending and Retail Sales -Retail activity has softened, with January retail sales declining 0.9% month-over-month, the largest drop since March 2023. However, year-over-year sales remain up 4.2%, indicating that while consumers are spending more cautiously, demand is still present.
- Small Business Sentiment and Credit Markets – The NFIB Small Business Optimism Index declined to 102.8 in January from 105.1 in December, reflecting growing concerns among business owners. The uncertainty index surged 14 points to 100, the third-highest level on record, suggesting businesses are wary about future economic conditions. Credit access remains a major concern, reflected in the Experian Small Business Index, which dropped to 40.5, down from 42.9 last month and 11 points lower year-over-year. This decline underscores the increasing difficulty small businesses face in securing credit to fund growth and operations.
The Opportunity: Minority-Owned Businesses Are Thriving but Need More Support
One of the most compelling insights from this month’s Commercial Pulse Report is the remarkable growth of minority-owned small businesses. These enterprises are expanding at a much faster rate than non-minority-owned businesses and now represent a significant share of new commercial account originations.
Key Growth Trends
- Over 8 million minority-owned businesses contribute more than $2 trillion in annual receipts, representing a powerful economic force.
- Between 2014 and 2019, the number of minority-owned businesses increased by 35%, compared to just 4.5% growth among non-minority businesses.
- Minority-owned businesses make up 41% of new commercial accounts, up from 37% in 2021, underscoring their increasing role in the broader business ecosystem.
Funding Gaps and Credit Access Challenges
Despite this rapid growth, minority-owned businesses continue to face challenges in accessing credit:
- On average, they receive 7% – 37% less funding across most commercial lending products.
- Businesses under six years old account for 44% of new commercial accounts for minority-owned firms, compared to just 31% for non-minority firms, yet they struggle to secure the funding they need to scale.
- This funding gap is not due to higher credit risk—minority-owned businesses exhibit comparable commercial credit performance to their non-minority counterparts.
Industries Driving Minority Business Growth
Minority-owned businesses are expanding into high-growth sectors such as:
🏗 Construction
🛍 Retail
🍽 Accommodation & Food Services
💡 Technology & Healthcare
These industries require significant upfront capital for expansion, making access to credit crucial for long-term success.
What This Means for Lenders and Policymakers
The disconnect between strong minority business growth and limited access to funding presents a major opportunity for lenders.
- For Lenders: Expanding lending opportunities for minority-owned businesses represents a high-growth market with proven credit performance. Bridging this funding gap can unlock billions in economic activity while serving an underserved business community.
- For Policymakers: Addressing structural barriers to credit access can further accelerate job creation, economic expansion, and financial inclusion in communities nationwide.
Final Thoughts: Investing in the Future of Small Business
The U.S. small business landscape is evolving. While macroeconomic headwinds—such as rising inflation and uncertain credit markets—present challenges, minority-owned businesses are demonstrating resilience, expansion, and growing demand for capital. For lenders, this is a $2 trillion opportunity to support a fast-growing sector with proven potential and unmet capital needs. By addressing credit access barriers, financial institutions can drive both economic growth and financial inclusion in the years ahead.
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
Experian Commercial Pulse Report reveals decline in total number of ecommerce businesses, strong revenue, and fewer credit inquiries.
