There is a large and largely overlooked segment of small business borrowers sitting inside every commercial lender’s consumer portfolio right now. They are carrying balances that rival commercial card averages, they are running active businesses, and they have never been offered a commercial credit product. Experian’s latest research puts a number on the opportunity: $195 billion in outstanding consumer card balances held by business owners who carry no business card at all.
That figure is not a market estimate or a projection. It is a direct measurement from Experian’s consumer and commercial credit bureaus. And it represents one of the most actionable conversion opportunities in commercial lending today.
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Personal Financing Is the Default — Not the Exception
Before a small business owner ever walks through the door of a commercial lender, the data shows they have already been funding their operations for some time — on their own terms and from their own pockets.
A recent survey of 1,000 business owners conducted by Hometap.com found that more than 87% report using some form of personal funds to finance their business. The breakdown is instructive. Personal savings account for 67% of initial financing. Loans from friends and family represent 13.4%. Home equity products — HELOCs, refinancing, and home equity investments — account for 6.9%. Together, these three sources tell a consistent story: small business owners are drawing on personal assets and personal relationships long before they access the commercial credit system.
This is not simply a behavioral preference. For many small business owners — particularly sole proprietors and early-stage firms — the commercial credit system has not been structured to reach them. In early 2026, 93% of new business formations are sole proprietors, up from 85% in 2018. New business formations reached 524,000 in May alone, continuing a post-pandemic surge that has averaged 451,000 new businesses per month since July 2020 — 54% above the pre-pandemic pace. The volume of new, small, and often unbanked commercial borrowers entering the market is accelerating. The commercial credit infrastructure serving them has not kept pace.
The Consumer Card as a Commercial Instrument
The $195 billion figure deserves closer examination because it reveals something important about borrower behavior. Business owners who carry only consumer cards — no business card of any kind — have average outstanding balances of $8,996. That is approximately 62% higher than the average balance of a consumer without a business. These borrowers are not using their personal cards for personal spending at typical consumer levels. They are using them to run their businesses.
Their credit behavior mirrors that of commercial borrowers. Their balance levels are comparable to commercial card averages. What distinguishes them is not their creditworthiness or their intent — it is simply that no commercial product has been extended to them.
For commercial lenders, this population represents a clearly defined and data-identifiable target segment. Experian’s combined consumer and commercial data infrastructure makes it possible to identify business owners carrying consumer balances at commercial scale — and to assess their creditworthiness for a transition to business credit products. The conversion pathway exists. The data to execute it exists. The question is whether lenders are prioritizing it.
How the Commercial Credit Mix Is Shifting
For business owners who have crossed over into commercial credit, the product mix follows a predictable and well-documented pattern — one that has important implications for lender strategy.
Commercial credit cards dominate, accounting for more than 78% of monthly originations. Small business card spend is growing at an estimated 9.5% compound annual growth rate and is projected to surpass $1.06 trillion by year-end 2026. Cards are the entry product, and for the smallest and youngest businesses, they often remain the primary product indefinitely.
Higher-limit products — term loans, lines of credit, and business leases — account for roughly 18% of originations, and that share is growing. Average outstanding balances have expanded across every product category since 2023. Commercial card balances are up 19%. Lines of credit are 31% above 2023 levels. Business leases are the standout, with 2026 average outstanding balances running 83% higher than 2023. Equipment and asset-backed financing is accelerating, particularly among more mature businesses in capital-intensive industries such as Public Administration, Mining, and Educational Services.
Fintech lenders are capturing meaningful share in term loans and lines of credit, driven by faster decisioning, digital-first applications, and broader qualification criteria. The trade-off for borrowers is real — fintech products typically carry higher rates — but speed and accessibility are winning business that traditional lenders are not competing for effectively.
The Risk Picture and the Strategic Imperative
The commercial credit portfolio is performing well in aggregate, but the nuances matter. Term loans carry the highest 91-plus days past due rates across product types, though those rates have been improving. Commercial cards show the lowest delinquency levels but the highest charge-off rates — a combination that warrants ongoing monitoring. Business bankruptcies reached 25,960 in Q1 2026, the highest quarterly total since 2016, underscoring the importance of disciplined underwriting even as origination appetite grows.
The strategic imperative for commercial lenders is clear. Tightening credit standards is appropriate in this environment. But overly restrictive policies can carry their own cost: they push creditworthy small business owners further into personal credit products, deepen their reliance on consumer cards, and widen the gap between what borrowers need and what commercial lenders offer.
The $195 billion sitting in consumer card balances is not simply a market opportunity. It is a signal about where the commercial credit system is falling short — and where data-driven lenders have the greatest room to grow.
Go Deeper with Experian
The Commercial Pulse Report from Experian covers the full landscape of small business financing — including origination trends, balance growth, product segmentation by industry and business age, delinquency and charge-off data, and the macroeconomic context shaping commercial credit demand.
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.
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The U.S. small business landscape is undergoing a structural transformation — and commercial lenders may need to rethink what a “small business borrower” looks like. According to Experian’s May 26th, 2026 Commercial Pulse Report, new business formations remain at historically elevated levels, averaging approximately 450,000 per month since the pandemic. That pace represents a 54% increase compared to pre-pandemic averages from 2018 and 2019. Watch the Commercial Pulse Update According to Experian’s latest Commercial Pulse Report, new business formations remain at historically elevated levels, averaging approximately 450,000 per month since the pandemic. That pace represents a 54% increase compared to pre-pandemic averages from 2018 and 2019. But perhaps more importantly, the composition of those businesses has changed dramatically. In early 2026, approximately 93% of newly formed businesses were sole proprietorships, up from 85% in 2018. Many of these businesses have no employees, limited operating history, and different borrowing behaviors than the traditional small businesses lenders historically underwrote. That shift is creating a fundamentally different commercial credit environment. A Different Kind of Small Business Owner Historically, many small business lending models were designed around businesses with employees, established operations, recurring revenue streams, and longer credit histories. Today’s wave of new businesses often looks very different. Many newer firms are being launched by individuals pursuing consulting work, freelance opportunities, side businesses, creator-economy income streams, or post-retirement self-employment. These businesses may operate leaner, carry lower fixed costs, and rely more heavily on revolving credit products rather than traditional financing structures. In many cases, the business owner and the business itself are financially intertwined. That evolution matters because underwriting a sole proprietor is not the same as underwriting a mature operating company. The rise in sole proprietorships is being driven by several long-term labor force and demographic trends now reshaping the U.S. economy. Demographic Shifts Are Driving Entrepreneurship One of the most important forces behind the surge in sole proprietorships is the aging U.S. population. By 2050, individuals aged 55 and older are projected to represent nearly 40% of the total U.S. population. At the same time, Americans are increasingly working later in life. Labor force participation among older workers has steadily increased over the past two decades, while participation among younger workers has trended lower. Retirement itself is also evolving. Many retirees are no longer fully exiting the workforce. Instead, they are remaining economically active through part-time consulting, contract work, side businesses, and self-employment arrangements. According to research highlighted in Experian’s report, 59% of workers expect to continue working during retirement, while 61% of recent retirees express interest in continued employment. These trends are contributing to a growing segment of “microbusinesses” — businesses with few or no employees operating primarily around the skills, experience, or services of an individual owner. At the same time, broader workplace dynamics are also influencing entrepreneurial activity. Employee Engagement Is Falling According to Gallup, employee engagement in the U.S. and Canada declined to 31% in 2025, down from post-pandemic highs. Gallup estimates that low engagement costs the global economy nearly $10 trillion in lost productivity. Younger workers in particular appear increasingly affected by workplace stress, burnout, and changing expectations around flexibility and career mobility. As a result, more individuals may be pursuing alternative work arrangements, independent income streams, or self-employment opportunities. The side-hustle economy continues to expand as well. A recent PYMNTS study found that nearly 20% of workers engaged in regular side work during the previous six months. Collectively, these labor force dynamics are reshaping not only how Americans work, but also how small businesses are formed, financed, and evaluated from a credit perspective. Commercial Credit Usage Looks Different Experian data shows meaningful differences in how smaller and larger businesses use commercial credit. Smaller businesses and sole proprietors rely more heavily on commercial credit cards, while larger firms tend to utilize a broader mix of leases, lines of credit, and term loans. Businesses with four or fewer employees received average commercial card credit lines of roughly $8,900 in 2025. By comparison, businesses with more than 100 employees averaged approximately $29,500 in new commercial card credit lines. Even when loan origination rates appear similar across business sizes, loan amounts differ substantially. Businesses with fewer than four employees averaged approximately $119,000 in term loan originations, while larger businesses averaged closer to $268,000. Risk performance differs as well. Larger firms generally continue to demonstrate lower delinquency rates and stronger commercial credit scores, reflecting greater operational scale, more established financial histories, and broader access to capital. Why Risk Models May Need to Evolve For lenders, these shifts present both opportunity and complexity. The surge in new business formation creates potential growth opportunities across commercial credit markets. However, many of today’s borrowers may not fit historical underwriting assumptions. Traditional business risk models often relied heavily on factors associated with mature operating businesses — payroll size, years in business, trade depth, and established commercial borrowing history. Today’s newer firms may instead require a more blended view of risk that incorporates both commercial and consumer-level behaviors, cash flow dynamics, and alternative indicators of financial stability. As sole proprietors and microbusinesses continue to account for a growing share of the small business economy, lenders may need to remain agile in balancing portfolio growth with disciplined underwriting and risk management strategies. The definition of “small business” is evolving — and commercial risk models may need to evolve alongside it. 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 Related Posts
