All posts by Gary Stockton

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

Energy Sector Headwinds: AI Demand and Global Oil Market Uncertainty Risk conditions for small businesses are shifting—and not always in obvious ways. Experian’s Q1 2026 Main Street Report highlights a landscape defined by mixed macro signals, tightening credit, and early signs of stress beneath the surface. While overall conditions remain relatively stable, rising costs, weakening sentiment, and constrained access to capital are beginning to reshape the risk profile of small business portfolios. For Chief Risk Officers, the message is clear: volatility is no longer isolated—it’s systemic, and it’s influencing both borrower behavior and lending strategy. The full report breaks down where these risks are emerging—and what they mean for credit performance in the months ahead. Download the report to stay ahead of the shift. Download Q1 2026 Main Street Report

Incremental increase underscores steady operating environment even as inflation and sentiment present headwinds Mar 2026 Index Value (Mar): 49.2 Previous Month: 48.8 MoM: 0.4 YoY: 2.0 (Mar 2025 = 47.2) The Experian Small Business Index™ remained largely unchanged in March, increasing by 0.4 points to 49.2. This reflects a year-over-year increase of 2 points and indicates relative stability in small business conditions. The broader macroeconomic environment continues to present mixed signals, contributing to recent variability in the index. Conditions appeared more stable in March. The unemployment rate held steady at 4.3 percent, and wages continued to rise modestly. Gross domestic product increased by 2 percent in the first quarter and has been positive in most quarters over the past two years. Private employers added approximately 62,000 jobs in March. U.S. employers also reported 32,826 planned hires, which is an increase from 12,755 reported in February. Inflation increased to 3.3 percent in March, up from 2.4 percent in February, driven in part by higher fuel prices. Gasoline prices rose by approximately $1.00 from the end of February through the end of March, reaching an average of about $4.00 per gallon. This represents a month over month increase of 36 percent. Diesel prices rose by 46 percent compared to the prior month and are up 52 percent year over year. Consumer sentiment declined to 53.3 in March from 56.6 in February. The Small Business Optimism Index also decreased slightly to 98.8. Retail sales remained stable to slightly higher, suggesting that increased fuel costs and lower sentiment have not yet led to a significant reduction in consumer spending. New business formation remained strong, with approximately 492,000 new businesses established in March. Explore Experian Small Business Index Related Posts

As we outlined in the May 5th Commercial Pulse Report, the commercial office space sector has been at the center of economic debate over the past several years. Headlines often focus on rising vacancies, remote work, and uncertainty around the future of office demand. But beneath these structural shifts lies a more nuanced—and in some ways unexpected—story. Despite ongoing pressure on occupancy levels, commercial office space businesses are demonstrating notable financial resilience, particularly when viewed through the lens of commercial credit performance. This divergence between market sentiment and underlying credit health is one of the most important dynamics emerging in today’s commercial landscape. Watch The Commercial Pulse Update A Sector Reshaped by Remote Work The transformation of the office market can largely be traced back to the rapid adoption of remote work. Prior to the pandemic, remote workers accounted for just 6.5% of the workforce. That number surged to 35% during 2020 and has since stabilized at approximately 22%. This shift fundamentally altered demand for office space. Vacancy rates, which were at a low of 11.4% in late 2019, climbed steadily to a peak in 2025. While vacancy levels have begun to stabilize, they remain elevated compared to pre-pandemic norms. For many investors and lenders, this has raised valid concerns about long-term asset performance and cash flow stability. However, vacancy rates alone do not tell the full story. The Pricing Paradox: Rising Rents Amid Higher Vacancies One of the more counterintuitive trends in the office sector is the continued rise in rental pricing. Even as vacancies increased, average asking rents have climbed to over $38 per square foot nationally. This trend is largely being driven by geographic concentration of demand. Major metropolitan areas such as Manhattan and Miami continue to exhibit strong occupancy fundamentals, with vacancy rates below 15% and rental prices significantly exceeding national averages. In effect, the office market is becoming increasingly bifurcated. High-demand, premium locations are maintaining pricing power, while other markets face more pronounced vacancy challenges. For lenders and credit professionals, this reinforces the importance of market-level and asset-level differentiation when evaluating risk. Credit Demand Is Normalizing Another notable shift within the office space sector is how businesses are engaging with credit. Historically, companies operating in this segment exhibited higher levels of credit demand compared to other industries. However, that gap has narrowed considerably in recent years. By early 2026, office space businesses are now seeking commercial credit at rates slightly below those of other sectors. This normalization suggests a maturing post-pandemic environment, where businesses are adjusting to new operating conditions and capital needs. It may also reflect more disciplined borrowing behavior as companies navigate uncertainty around long-term space utilization and revenue models. A Distinct Credit Profile Beyond overall demand, the composition of credit usage within the office space sector also stands out. While commercial cards remain the most widely used credit product across industries, office space businesses show a greater reliance on term loans and lines of credit. At the same time, they maintain relatively lower exposure to commercial cards compared to their peers. This distinction is meaningful. Term loans and lines of credit are often associated with longer-term financing strategies and structured capital needs, whereas commercial cards tend to support shorter-term, operational expenses. The mix suggests that office space businesses may be taking a more strategic approach to capital management. Stronger-Than-Expected Credit Performance Perhaps the most compelling insight from the data is the sector’s risk profile. Despite widespread concerns about office market fundamentals, businesses in this space are outperforming other industries on key credit metrics. Late-stage delinquency rates for office space businesses are approximately 0.27%, compared to 0.70% for other industries—less than half the rate. In addition, these businesses tend to maintain higher average commercial credit scores, further reinforcing the view that they represent a relatively lower-risk segment from a credit standpoint. This combination of lower delinquency and stronger credit scores points to disciplined financial management across the sector, even amid structural disruption. Reconciling Risk Perception vs. Reality The disconnect between perceived risk and actual credit performance raises an important question: why does the sector still feel so risky? The answer lies in the difference between structural market challenges and near-term financial behavior. Elevated vacancy rates, evolving workplace trends, and uncertainty around long-term demand all contribute to a cautious outlook. These are legitimate concerns, particularly for asset valuations and long-duration investments. However, current credit data suggests that many office space businesses are adapting effectively. They are managing debt responsibly, maintaining strong payment performance, and aligning their capital strategies with a changing environment. For credit professionals, this highlights the need to balance macro-level narratives with granular, data-driven insights. What to Watch Going Forward Remote work trends: Will hybrid and remote models continue to suppress demand, or stabilize at current levels? Operating cost pressures: Rising energy prices and inflation may impact both landlords and tenants, influencing margins and credit demand. Market bifurcation: Performance gaps between high-demand metros and weaker markets may widen, increasing the importance of localized risk assessment. Credit discipline: The sector’s strong credit performance will be tested if broader economic conditions weaken. A Sector Defined by Transition—and Resilience The commercial office space market is undeniably in transition. Structural changes driven by remote work have reshaped demand, and elevated vacancies remain a persistent challenge. Yet, the data tells a more balanced story. Strong rental performance in key markets, disciplined credit usage, and low delinquency rates all point to a sector that is more resilient than headlines might suggest. For lenders, risk managers, and commercial credit professionals, the takeaway is clear: understanding today’s office market requires moving beyond surface-level indicators and focusing on the underlying financial behavior of businesses within the sector. Because in this case, the credit data may be telling a very different story than the skyline. 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

What the Energy Transition Means for Small Business Risk, Cost, and Credit Strategy A structural shift is underway in the U.S. economy—one that is easy to underestimate but increasingly difficult to ignore. Power demand is accelerating at a pace not seen in decades, driven largely by the rapid expansion of AI and data infrastructure. For lenders and risk professionals, this isn’t just an energy story—it’s a credit, cost, and portfolio strategy story. As highlighted in Experian’s latest Commercial Pulse Report (04.21.2026), electricity demand is entering a new phase of sustained growth. Unlike previous cycles, this surge is not temporary—it is structural, capital-intensive, and poised to reshape the operating environment for small businesses over the long term. Watch the Commercial Pulse Update The New Demand Curve: AI as an Energy Catalyst The rise of AI is often framed in terms of productivity and innovation. Less discussed is its physical footprint—specifically, the energy required to power it. Data centers, the backbone of AI infrastructure, are expected to consume more than 600 terawatt-hours of electricity annually by 2030, accounting for over 11% of total U.S. power demand. This represents a dramatic increase in a relatively short period of time. At the same time, overall electricity demand has already been trending upward. In 2025, U.S. electricity consumption was approximately 11% higher than in 2020, reflecting not just AI growth but broader digitalization across industries. For small businesses, the implication is straightforward: energy is no longer a stable, background operating expense—it is becoming a dynamic and increasingly material cost driver. Supply Constraints and the Cost Transmission Effect While demand is accelerating, supply is struggling to keep pace. The energy sector is undergoing a transition away from traditional fossil fuels toward renewable sources such as wind and solar. While renewables offer faster development timelines, they require significant upfront investment and infrastructure upgrades to scale effectively. From 2015 through 2024, U.S. utilities invested approximately $1.3 trillion in capital expenditures, with another $1.1 trillion projected through 2029. These investments are critical—but they are not without cost. Utilities typically recover infrastructure investments through rate increases. As a result, rising capital expenditures are translating directly into higher electricity prices for both consumers and businesses. Since 2021, electricity rates have increased steadily, reflecting the widening gap between demand growth and supply expansion. For small businesses, this creates a cost-transmission effect: large-scale infrastructure investment at the utility level flows downstream into operating expenses, compressing margins—particularly for energy-intensive industries. A More Capital-Intensive Sector—and Why That Matters for Credit From a credit perspective, the electric energy sector presents a distinct and increasingly important profile. Experian data shows that businesses within the sector are significantly more capital-intensive than the broader market. Average commercial balances per business are roughly four times the cross-industry average, reflecting the scale of investment required to build and maintain energy infrastructure. Financing structures also differ. The sector relies more heavily on term loans and leases—products aligned with long-duration, asset-heavy investments—than on revolving credit, which is typically used for working capital. At the same time, demand for credit in the sector has been rising. Credit-active businesses have grown faster than the broader market, and inquiry activity has accelerated, particularly over the past two years. For lenders, this signals two key dynamics: Sustained demand for structured financing products tied to infrastructure and equipment Increased exposure to a sector with elevated capital requirements but improving fundamentals Improving Credit Quality Amid Higher Leverage One of the more notable trends is that credit quality within the energy sector has improved, even as borrowing remains elevated. Severe delinquency rates—accounts 90+ days past due—have declined materially and now sit well below the broader market. This suggests that, despite higher leverage and utilization, businesses in the sector are managing their obligations effectively. This divergence is important. While many sectors have faced rising credit pressure in recent years, the energy sector appears to be strengthening, supported by consistent demand and long-term investment flows. For risk teams, this creates a more nuanced view of exposure. Higher balances do not necessarily equate to higher risk—particularly in sectors where revenue visibility and demand fundamentals are strong. The Small Business Impact: Margin Pressure Meets Strategic Adjustment For small businesses outside the energy sector, the implications are less about opportunity and more about adaptation. Rising electricity costs are likely to become a persistent headwind. Unlike one-time shocks, this pressure is tied to long-term structural changes in demand and infrastructure investment. As a result, businesses may need to rethink how they manage energy as part of their broader financial strategy. Key considerations include: Pricing strategy: Passing through higher costs where possible without eroding demand Expense management: Identifying efficiencies to offset rising utility expenses Capital planning: Evaluating investments in energy efficiency or alternative solutions Liquidity management: Ensuring sufficient flexibility to absorb cost volatility For lenders, these dynamics will increasingly show up in credit performance—not necessarily as immediate distress, but as gradual margin compression that can impact repayment capacity over time. Why This Matters Now The most important takeaway is that this is not a short-term cycle. The convergence of AI growth, infrastructure investment, and energy transition is creating a durable shift in both cost structures and credit demand. Energy is becoming a strategic variable—one that influences everything from operating margins to borrowing needs. For CROs and risk leaders, this reinforces the importance of: Monitoring sector-specific cost pressures Incorporating energy exposure into risk models Understanding capital intensity differences across industries Leveraging data-driven insights to identify emerging opportunities and risks The energy sector itself may present attractive lending opportunities, given its strong demand outlook and improving credit profile. At the same time, rising energy costs will act as a secondary pressure across portfolios, particularly among small and mid-sized businesses. Final Thought Power demand is no longer just an infrastructure story—it’s a credit story. As AI continues to scale and the energy transition accelerates, the effects will ripple across industries, balance sheets, and lending strategies. Those who understand these dynamics early will be better positioned to manage risk, identify opportunity, and support small businesses navigating an increasingly complex cost environment. 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

The Experian Small Business Index™ decreased by 5.5 points in February to 48.8. Despite the decline, the index remains 3.4 points higher than a year ago and within its historical average range.

Learn how CROs can use business credit scores to analyze portfolio risk, track migration, and drive smarter commercial lending and risk management decisions.

Experian Commercial Pulse explores how AI is changing credit risk with a fascinating study of high-impact AI industries.

Women-Owned Small Businesses: Growth, Credit Behavior, and Risk Implications for Lenders A fast-growing segment, women-owned businesses bring unique credit dynamics shaped by size, lifecycle, and access to capital. Understanding these differences is key to improving risk accuracy and capturing growth. This week, the Commercial Pulse Report takes a closer look at Women-owned small businesses, and there's a lot to be excited about. Watch The Commercial Pulse Update Women-owned businesses are no longer a niche segment—they are a defining force in the evolution of the U.S. small business landscape. Today, they account for nearly half of all new business formations and generate approximately $2.7 trillion in annual revenue. For Chief Risk Officers and credit risk teams, this growth presents both opportunity and complexity. The structural and behavioral differences of women-owned businesses introduce new considerations for underwriting, portfolio management, and long-term risk strategy. A Rapidly Expanding—but Structurally Distinct—Segment The growth trajectory of women-owned businesses is undeniable. In 2025 alone, women owned more than 14 million businesses in the U.S.—nearly double the total from two decades ago. However, this expansion is not simply a scaled version of traditional small business growth. Women-owned firms tend to be: More concentrated in service-oriented industries Smaller in size, with lower average revenue Earlier in their business lifecycle These characteristics matter from a risk perspective. Younger businesses inherently carry higher uncertainty, shorter credit histories, and less established operating resilience. For underwriting teams, this means traditional risk models—often calibrated on more mature firms—may underrepresent or misclassify risk in this segment. Credit Access and Capital Structure: A Different Funding Model One of the most important distinctions lies in how women-owned businesses access capital. Compared to male-owned businesses, women entrepreneurs: Seek less commercial credit overall Rely more heavily on personal networks such as friends and family Utilize credit cards and online lenders more frequently than traditional bank financing They also tend to have fewer commercial trade lines and lower credit limits. At first glance, this could be interpreted as weaker credit demand. In reality, it often reflects structural barriers to access, differences in borrowing preferences, and earlier-stage business profiles. For CROs, this raises a critical question:Are current underwriting frameworks capturing true risk—or simply reflecting historical access inequalities? Utilization and Discipline: A More Nuanced Risk Signal Despite lower credit limits and fewer trade lines, women-owned businesses exhibit similar credit utilization rates compared to male-owned businesses. This is a crucial insight. Equivalent utilization, despite constrained access to credit, suggests: Strong credit discipline Efficient use of available capital Potential unmet demand for additional financing From a risk modeling perspective, utilization alone may not be a sufficient differentiator. Instead, it should be evaluated alongside capacity constraints and growth intent. This creates an opportunity for lenders to refine segmentation strategies—identifying businesses that are not overextended, but rather underserved. Delinquency and Credit Performance: Stability with Key Gaps From a performance standpoint, the data offers a more balanced view. Delinquency rates between women- and male-owned businesses are comparable, indicating similar repayment behavior across segments. However, average commercial credit scores for women-owned businesses remain slightly lower. This gap is largely driven by: Shorter credit histories Fewer active trade lines Lower overall credit exposure Encouragingly, the credit score gap has begun to narrow in recent months. For risk leaders, this suggests that observed differences in credit scoring are less about elevated risk and more about data depth and credit maturity. This distinction is critical when designing underwriting policies that balance inclusion with risk controls. Generational Momentum and Future Portfolio Impact Another dynamic shaping this segment is generational. Among Millennials and Gen Z, women are now starting more businesses than men. This shift is driven by motivations such as: Flexibility and autonomy Desire for control over work schedules Pursuit of entrepreneurial independence For lenders, this signals that the influence of women-owned businesses will not only persist—but accelerate. As these younger businesses mature, they will transition into larger credit exposures, more complex financing needs, and deeper integration into commercial credit ecosystems. The decisions made today around underwriting, access, and segmentation will directly shape the future risk profile of portfolios. Implications for Risk Strategy and Underwriting For Chief Risk Officers and their teams, the rise of women-owned businesses presents a clear mandate: evolve risk frameworks to reflect a changing borrower base. Key considerations include: Reassessing underwriting models to account for thinner credit files and shorter business histories Incorporating alternative data to better evaluate early-stage businesses Differentiating between constrained access and true risk exposure Monitoring portfolio diversification as this segment grows in share Importantly, this is not simply a question of expanding access. It is about improving risk accuracy. Misinterpreting structural differences as elevated risk can lead to missed growth opportunities, while failing to account for lifecycle dynamics can introduce unintended exposure. Balancing Growth and Risk in a Changing Landscape Women-owned businesses represent a fast-growing, resilient, and evolving segment of the economy. They are reshaping patterns of credit demand, challenging traditional assumptions, and creating new opportunities for lenders. At the same time, they require a more nuanced approach to risk assessment—one that recognizes the interplay between business maturity, access to capital, and credit behavior. For CROs, the path forward is clear: leverage data, refine models, and align risk strategy with the realities of today’s small business landscape. 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