At A Glance
The U.S. small business population has expanded significantly since the pandemic, with much of that growth coming from sole proprietors. For CROs and credit risk teams, this changing borrower profile creates both opportunity and new considerations. Rising early-stage delinquency and higher business card utilization suggest potential cash-flow pressure, while late-stage delinquency remains relatively close to larger firms. The takeaway: lenders should closely monitor multiple risk signals and ensure their segmentation, underwriting and portfolio management strategies evolve alongside the small business market.A New Small Business Landscape Is Reshaping the Credit Risk Equation
The small business market that Chief Risk Officers are managing today looks meaningfully different from the one that entered the pandemic.
The number of small businesses in the U.S. has risen from 30.7 million in 2019 to 36.2 million in 2026, according to data presented in the latest Experian Commercial Pulse. That represents growth of roughly 18% in seven years. For financial institutions, that growth creates opportunity.
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For Chief Risk Officers and credit risk management teams, the important question may be: What kind of businesses are being created, and does the existing approach to assessing and monitoring small business risk adequately reflect this changing population?
The data suggests this is a question worth examining.
More businesses, but a different kind of business
The increase in small businesses is only part of the story.
New business formation accelerated sharply during the pandemic and has remained elevated. But as the chart below illustrates, much of this activity is being driven by sole proprietors rather than businesses planning to employ workers. By 2026, sole proprietors represented 93.3% of new business formation applications in the data presented.
That distinction matters for credit risk.
A growing population of very small businesses can have fundamentally different financial characteristics from larger, more established firms. They may have thinner operating histories, smaller liquidity cushions and greater dependence on the financial capacity of the owner.
For CROs, therefore, the growth in business formation shouldn’t necessarily be interpreted simply as growth in the traditional small business segment. It represents a change in the composition of the addressable credit population.
And that can have implications across acquisition, underwriting, portfolio segmentation and account management.
The risk signal isn’t necessarily where you might expect it
With a rapidly expanding population of small businesses, a natural concern is whether credit performance is deteriorating.
The answer from the current data is nuanced.
Experian commercial credit data shows that small businesses have consistently experienced higher early-stage delinquency than larger businesses. By June 2026, the three-month rolling average of 31+ day delinquency was approximately 1.9% for small businesses versus approximately 1.6% for larger businesses. The report describes this pattern as a potential indication of cash-flow pressure.
Yet the late-stage picture looks different.
As the above chart shows, 91+ day delinquency has risen for both populations, but the difference between small and larger businesses is relatively narrow. By June 2026, the two series had converged considerably compared with earlier periods.
That distinction is important for risk leaders.
Higher early-stage delinquency can be an early warning signal without necessarily indicating that the portfolio is headed toward equivalent increases in severe delinquency. The current data suggests small businesses are experiencing more payment pressure while, so far, demonstrating greater resilience at later stages than their early-stage performance alone might imply.
For CROs, that argues for monitoring the migration of risk rather than reacting to a single delinquency measure.
Watch utilization alongside delinquency
Another potentially important signal appears in how small businesses are using existing credit.
At the beginning of 2023, business card utilization rates for small and larger businesses were almost identical. Since then, the trajectories have separated.
By mid-2026, the three-month rolling utilization rate for small businesses was around 27.5%, compared with approximately 25% for larger businesses.
For risk teams, the direction of that gap may matter as much as its absolute size.
Rising utilization can have multiple explanations and should not be interpreted as distress on its own. But when considered alongside higher early-stage delinquency, it provides another dimension for monitoring potential cash-flow pressure.
This is where a multidimensional view of the borrower becomes increasingly valuable. Rather than waiting for late-stage delinquency to provide confirmation of stress, risk teams can consider how utilization, payment behavior and other portfolio signals are changing together.
What should CROs consider now?
The post-pandemic expansion of small business is not inherently a negative credit story. Quite the opposite: millions of new businesses represent a significant opportunity for lenders seeking responsible portfolio growth.
The challenge is making sure risk strategies evolve with the population they are designed to assess.
For CROs and credit risk management teams, three considerations stand out:
- Revisit segmentation. A market increasingly composed of sole proprietors may require more granular segmentation than a broad definition of “small business” provides.
- Monitor combinations of early-warning indicators. Early-stage delinquency, utilization and changes in credit-seeking behavior may provide a more useful picture together than any one metric in isolation.
- Separate emerging pressure from realized loss. Small businesses currently show signs of greater early-stage stress, but late-stage delinquency remains much closer to that of larger firms. That distinction can help risk teams calibrate responses rather than overcorrect.
The objective is not necessarily to tighten credit because the market has changed. It is to understand how it has changed and make sure underwriting, monitoring and portfolio management strategies remain aligned with the underlying risk.
For CROs, that balance is increasingly important: capturing the growth opportunity created by a rapidly expanding small business economy while identifying changes in borrower behavior early enough to protect portfolio performance.
The small business population has changed significantly since the pandemic. The next question for risk leaders is whether their credit risk frameworks have changed with 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.
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