A Growing Small Business Financial Fraud Problem

In the just-released Experian Commercial Pulse Report, we focus on a growth small business sector – Education Services, which enjoys healthy, consistent formation, and stable credit management. For Chief Risk Officers navigating an uncertain lending landscape, the question isn't just where growth is happening—it's where growth aligns with manageable risk. The Education Services sector presents exactly that combination, and the numbers tell a compelling story that contradicts conventional wisdom about small business exposure. Watch The Commercial Pulse Update A Sector Transformation Driven by Economic Realities The fundamentals driving Education Services' growth aren't temporary market anomalies; they're structural shifts in how young adults approach career preparation. With youth unemployment rates persistently running more than twice the general population, and young workers facing heightened job security concerns, the demand for skills-based training has fundamentally changed. The traditional four-year degree path is losing its popularity. While bachelor's degree holders still experience lower unemployment rates than those with associate's degrees, the gap has narrowed considerably in recent years. Meanwhile, the escalating cost of traditional college education is accelerating a pivot toward trade schools and specialized training programs, a trend reflected in rising post-secondary enrollment, particularly in trade education. This isn't speculation. Through November 2025, nearly 76,000 new education services businesses have opened— with 7,653 opening in November, the highest level on record. This represents a 205% increase in just two decades. Employment in the sector crossed 4 million for the first time in July 2025. These aren't vanity metrics; they signal sustained, fundamental demand. The Small Business Concentration: Risk or Resilience? Here's where traditional risk models might flash warning signals: businesses with fewer than 10 employees now represent nearly 80% of all educational services firms, up from 63% in 2019. For most sectors, such a high concentration of small businesses would trigger heightened scrutiny and tighter credit controls. But Education Services is defying that conventional risk calculus. Despite this shift in concentration toward smaller operators, credit performance metrics tell a different story—one of discipline and stability that should inform how risk leaders approach this segment. Credit Performance That Challenges Assumptions The credit behavior within Education Services reveals patterns that warrant a fresh risk assessment framework. Commercial credit cards dominate the sector, representing over 78% of monthly originations—a preference that actually provides lenders with valuable visibility into cash flow patterns and working capital management. What's particularly noteworthy: while many industries have experienced tightening credit limits over the past several years, average commercial card limits in Education Services have increased 23% since 2019, now exceeding $19,000. This expansion isn't resulting in overleveraged borrowers. Utilization rates remain relatively low, and average commercial credit scores have held stable throughout this rapid expansion phase. This combination, expanding credit access paired with stable utilization and consistent credit performance, signals something important: disciplined financial management even among newer, smaller operators. For risk leaders, this should prompt a critical question: are your current underwriting models properly calibrated to identify opportunity in this segment, or are they applying broad small business assumptions that miss sector-specific strength signals? Strategic Implications for Risk Leaders The Education Services growth story presents three strategic imperatives for Chief Risk Officers: First, industry-specific risk strategies deliver differentiated insight. Blanket approaches to small business risk assessment will systematically underprice opportunity in sectors like Education Services while potentially overexposing you elsewhere. The stable credit performance despite small business concentration demonstrates that sectoral dynamics matter more than size alone. Second, continuous monitoring beats static underwriting. The rapid composition shift in Education Services—from 63% to 80% small business concentration in just six years illustrates how quickly sector profiles can evolve. Risk strategies built on outdated sector snapshots will either miss growth opportunities or accumulate unrecognized exposure. Real-time portfolio monitoring and dynamic risk modeling aren't optional anymore. Third, growth doesn't automatically mean elevated risk. The Education Services sector challenges the reflexive association between rapid expansion and deteriorating credit quality. In this case, expansion has coincided with improving credit access and stable performance. The key differentiator? Understanding the fundamental demand drivers and recognizing when growth is structural rather than speculative. The Broader Context: Skills-Based Economy Acceleration Education Services isn't growing in isolation. It's responding to, and enabling, a broader economic transformation toward skills-based career pathways. As this transformation accelerates, the sector's role becomes increasingly central to workforce development, suggesting sustained long-term demand rather than cyclical opportunities. For financial institutions, this means Education Services represents more than a near-term growth play. It's a sector aligned with multi-year economic trends, serving businesses that fill a critical gap in how workers prepare for evolving job markets. Moving Forward The Education Services sector demonstrates that growth opportunities and manageable risk profiles can coexist, when you have the right analytical framework to identify them. For Chief Risk Officers, the question is whether your institution's risk infrastructure can recognize these nuances or whether you're leaving opportunity on the table. As 76,000 new businesses enter this sector and credit performance remains stable, the window for strategic positioning won't remain open indefinitely. Competitors with more sophisticated sector-level risk analytics will identify and capture these borrowers first. The data is clear. The opportunity is measurable. The question for risk leaders is simple: what's your strategy for Education Services? ✔ 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 Commercial Pulse Report Explores Implications of Rising Premiums As the year draws to a close, one issue looms large for millions of small business owners: the rising cost of healthcare. According to the latest Experian Commercial Pulse Report, small business survival may soon hinge on a single factor — whether enhanced Affordable Care Act (ACA) subsidies are extended into 2026. Watch the Commercial Pulse Update The Clock Is Ticking on ACA Subsidies The American Rescue Plan and Inflation Reduction Act temporarily expanded ACA subsidies, helping make coverage more affordable for millions. But those enhancements are set to expire at the end of 2025 — a policy shift that could unleash a wave of economic strain. The Kaiser Family Foundation estimates that if these subsidies lapse, individuals who purchase insurance through the ACA marketplace could see a 75% increase in premiums. Why does this matter so much for small businesses? Because half of all ACA marketplace enrollees are small business owners, entrepreneurs, or their employees. Coverage Is Shrinking, and Costs Keep Climbing Smaller businesses have historically been less likely to offer health insurance benefits than their larger counterparts. In 2025, only 64% of businesses with 25 to 49 employees offer health benefits — the lowest level ever recorded. And while large employers are still required by the ACA to offer coverage to full-time workers, they too are feeling the pressure. Since 2010, employers have gradually reduced the share of healthcare premiums they cover, even as deductibles have risen by 164% for single coverage plans. The result? Business owners are being squeezed from both sides — by rising insurance costs and a more financially stressed workforce. The Ripple Effects Could Be Widespread If enhanced subsidies aren’t renewed, many small businesses may have no choice but to: Shut down operations Cut staff Shift jobs into larger organizations that can offer coverage That would be a blow not only to small business dynamism but also to broader economic sectors. Reduced consumer spending could hit industries like retail, real estate, and manufacturing, while healthcare providers face payment cuts and job losses due to shrinking coverage pools. What’s Next? With Congress set to vote on subsidy extensions before the end of the year, the stakes couldn’t be higher. The outcome will likely define affordability, access, and entrepreneurship for years to come. For small business owners, now is the time to assess your coverage plans, understand your employee needs, and prepare for potential cost increases. For policymakers and industry leaders, it’s a critical moment to ensure healthcare reforms continue to support the backbone of the U.S. economy — small businesses. Experian continues to provide actionable data to help businesses, lenders, and policymakers navigate uncertainty. To access the full Commercial Pulse Report and explore more insights on small business credit and sector-specific performance: ✔ 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

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