At A Glance
The Commercial Pulse report explores education services, a sector that grew more than 200 percent with stable credit performance.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.
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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.
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Small business formation remains one of the more notable trends in the U.S. economy. In August 532,000 new businesses launched across the country. While that was down from July, it remained well above historical averages. Since July 2020, an average of 455,000 new businesses have opened each month—56% higher than the pre-pandemic monthly average in 2018 and 2019. But the national numbers only tell part of the story. Watch The Commercial Pulse Update Experian’s latest Commercial Pulse report analysis examines where this growth is occurring and what it means for the commercial credit market. The data show that the South has emerged as an important center of small-business growth. And the businesses driving that expansion tend to have a different profile from their counterparts in other regions. For commercial lenders, understanding those differences can provide valuable context when evaluating new opportunities, credit demand and portfolio risk. Business growth is shifting geographically New business formation has increased across all U.S. regions, but the pace has not been uniform. Prior to 2018, regional differences in growth were relatively modest. During the pandemic years of 2020 and 2021, the South led the country in new business application growth. Since 2022, the West has posted the strongest growth, while the South continues to account for the greatest volume of new business openings. One factor providing context for that growth is population. The population of the South has grown more than 7% since 2019. Since 2020 alone, the region has added more than 3.6 million residents, outpacing every other U.S. region. Meanwhile, populations in other parts of the country declined between 2020 and 2022 before beginning to recover. Business formation and population movement do not necessarily have a simple cause-and-effect relationship. But their parallel growth highlights how the geographic makeup of both consumers and businesses has been changing. Credit-active businesses are growing even faster in the South The shift becomes even clearer when looking at businesses using commercial credit. Experian data shows the number of credit-active businesses in the United States has increased 55% since 2018. Every region participated in that expansion, but the South experienced the greatest growth at 70%, followed by the North at 52%, West at 50% and Midwest at 36%. The South now represents approximately 39% of U.S. credit-active businesses. It also accounted for more than 40% of newly opened commercial accounts in 2026, compared with 37% in 2019. For commercial credit organizations, that means the South represents not just a growing population of businesses, but an increasingly significant share of businesses participating in the commercial credit ecosystem. Southern businesses tend to be smaller and younger The composition of this growth is just as important as its scale. Credit-active businesses in the South and West tend to skew smaller and younger than those in the North and Midwest. In the South, 53% of businesses generate less than $500,000 in annual revenue, while 59% have fewer than five employees. Only 36% have been operating for more than 10 years, compared with 43% in the Midwest. Those characteristics can influence how businesses interact with credit. A younger business, for example, may have had less time to establish multiple commercial credit relationships. That pattern appears in Experian’s data. Across the United States, the average number of commercial credit accounts per business has declined from approximately 1.8 in 2018 to 1.5 in 2026. The South experienced the steepest decline and currently has the fewest accounts per business. At the same time, commercial credit inquiries have increased since 2023, most recently peaking in early 2026. Inquiry rates have typically been higher in the Midwest and South. The combination of fewer existing accounts and elevated inquiry activity provides useful context for lenders seeking to understand the credit needs of a growing population of younger businesses. Credit utilization tells another part of the story Regional differences also appear after businesses establish credit relationships. Businesses in the Midwest and North opening new commercial accounts tend to receive higher lines than businesses in the South and West. At the same time, businesses in the South show higher commercial card utilization despite carrying somewhat lower average balances. Experian’s analysis points to lower credit lines as an important factor behind that relationship. These trends reinforce why looking beyond a single credit metric can be important. Higher utilization, for example, can take on additional context when considered alongside credit-line size, business age, balances and regional business formation. Growth brings opportunities—and risk factors to monitor Despite significant growth and changes in business composition, regional credit performance has remained relatively steady. Commercial delinquencies across all regions are near pre-pandemic levels, while commercial credit risk scores have been relatively stable. There are regional differences worth monitoring, however. Businesses in the South have lower average commercial credit scores than businesses in the other regions analyzed, and delinquency rates tend to be higher in the North and South than in the Midwest and West. The broader takeaway is not simply that there are more small businesses in the South. It is that the composition of the commercial market is evolving alongside that growth. The South represents a growing share of credit-active businesses and new commercial accounts. Many of those businesses are younger, smaller and have fewer established commercial credit relationships. Their credit needs and behaviors may therefore differ from those of more mature businesses in other parts of the country. For commercial lenders and risk leaders, understanding those distinctions can help provide greater context around acquisition, underwriting and portfolio management decisions. As small business formation continues, Experian will continue monitoring where that growth is occurring—and how the changing business landscape is showing up in commercial credit behavior. Learn more ✔ 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 Where are small businesses growing in the U.S.? Experian data points to significant growth in the South. While new business formation has increased across the country, the South has consistently recorded the highest volume of new business openings and has seen the number of credit-active businesses grow 70% since 2018—compared with 55% nationally. Where are small businesses growing the most? The South has consistently had the largest volume of new business openings. The South led application growth during 2020–2021, while the West has posted the strongest growth rates since 2022. That distinction is important because it prevents the SEO headline from overstating what the data shows. Why has small business growth been so strong in the southern U.S.? The South has added more than 3.6 million residents since 2020, substantially outpacing other regions. Our report establishes a correlation rather than causation. 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