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The Experian Small Business Index™ rebounded by 8.5 points month-over-month, remains up by 12.8 points Year-Over-Year Jan 2026 Index Value (Jan): 54.3 Previous Month: 45.8 MoM: 8.5 YoY: 12.8 (Jan 2025 = 41.5) The Experian Small Business Index™ increased 8.5 points to 54.3 in January. This is 12.8 points higher than it was a year ago. The improvement coincided with declines in certain risk indicators, including utilization and overdue balances, alongside increased demand for and access to new credit. At the same time, some risk factors warrant continued monitoring, as later delinquencies on commercial trades and early-stage delinquencies on consumer trades ticked upward. Several macroeconomic indicators improved in January, including inflation and labor market measures. Inflation decreased from 2.7% in December to 2.4% in January, the lowest since May 2025. Core inflation was down from 2.6% to 2.5%, the lowest since March 2021. The U.S. economy added 130K jobs in January, and unemployment ticked down to 4.3% from 4.4%. Some indicators, however, pointed to ongoing economic pressure. The PCE price index increased slightly in December to 2.9% from 2.8%, remaining above the Federal Reserve’s 2% target. Personal savings also fell for the eighth consecutive month as households continue to face higher prices. Consumer interest in new business formation remained elevated, with 532K new business applications filed in January. Explore Experian Small Business Index Related Posts

Experian's Construction Industry Risk Model Offers Greater Precision for CRO's Construction is building momentum in 2026 — but capital is becoming more selective just as demand accelerates. For Chief Risk Officers, this is not simply a growth story. It is a risk calibration moment. For Chief Risk Officers and commercial lenders, that combination creates a complex credit environment: expanding opportunity on one hand, rising sector-specific risk on the other. This week’s Commercial Pulse Report highlights why construction deserves close attention — and why traditional risk tools may not be sufficient in the current cycle. Watch The Commercial Pulse Update A Growing Sector with Structural Tailwinds Construction contributes approximately 4.8% of U.S. GDP and remains a foundational industry supporting infrastructure modernization, AI-powered data centers, renewable energy expansion, and multifamily housing demand. Since Q1 2013, the number of construction firms in the U.S. has grown by 28%, reaching nearly 950,000 establishments. Employment in the sector has increased 49% since January 2010, reflecting both demand expansion and increased new business formation. Construction spend peaked at just over $2.2 trillion in April 2024, contracted 3.3% in 2025, and is forecast to rebound 7% in 2026 to exceed $2.1 trillion. Construction businesses seek credit more than twice as often as companies in many other industries — a structural dynamic that fundamentally alters how risk signals should be interpreted. From a growth perspective, the fundamentals remain solid. Non-residential construction is particularly strong, driven by: AI-powered data center buildouts Renewable energy infrastructure Public infrastructure modernization Regional population and job growth For lenders, that growth trajectory signals continued credit demand — especially for working capital, equipment financing, and project-based lending. But growth alone doesn’t define risk. Payment Friction Is Structurally Embedded While construction is expanding, it is also experiencing persistent cash flow strain. According to a 2025 industry study referenced in the report: 70% of contractors regularly face delayed payments 41% have increased their use of credit to manage cash flow 1 in 4 contractors have reduced bidding activity due to financial strain Top contributors to payment delays include: Cash flow constraints Contract disputes Administrative inefficiencies Banking and financing delays Technology and process friction Construction projects are capital-intensive and milestone-driven — meaning liquidity depends on payment timing, not just performance. When developers delay payments, the effects cascade through subcontractors and suppliers. For lenders, this creates a recurring risk pattern: strong backlog with fragile cash flow. For CROs, this creates a distinct risk profile: businesses may show strong top-line growth but experience liquidity stress due to payment timing — increasing reliance on revolving credit and short-term financing. Construction Businesses Seek and Use More Credit Experian data reveals that construction businesses: Seek commercial credit more than twice as often as non-construction businesses Maintain a higher average number of commercial trades Exhibit higher 60+ day delinquency rates compared to other industries At the same time, commercial lenders continue reporting tightened underwriting standards, particularly for small firms. This dynamic — structurally elevated credit demand colliding with tighter credit conditions — increases the need for precise risk interpretation. Elevated inquiries and higher trade counts in construction are not inherently distress signals. In many cases, they reflect the capital-intensive, project-based nature of the industry. The risk is not high credit usage — the risk is misinterpreting what that usage signals. Construction firms are not homogenous. Risk varies significantly across: Trade specialty Project mix (residential vs. non-residential) Business maturity Regional economic exposure Capital structure and utilization patterns Generic commercial risk scores may not fully capture these industry-specific nuances, increasing the potential for both over- and under-estimating risk within construction portfolios. Why Generic Risk Models Fall Short in Construction Construction presents several characteristics that can distort traditional risk assessments: High inquiry and trade activity – Elevated credit usage may reflect normal operating structure, not necessarily distress. Cyclical delinquency patterns – Project-based payment timing can temporarily inflate delinquency metrics. Industry-specific trade relationships – Supplier networks and payment practices differ from other sectors. Material cost volatility – Construction input costs have tripled since the early 1980s and remain elevated relative to pre-pandemic levels. When underwriting models are calibrated to all industries collectively, they may under- or over-estimate risk within construction portfolios. In tightening credit cycles, imprecision compounds faster: Constraining high-quality borrowers Underpricing volatile segments Misallocating capital For CROs, this is not theoretical — it is a margin issue. The Case for Industry-Specific Risk Modeling Addressing this requires industry-calibrated analytics — models built specifically to reflect construction trade behavior and payment dynamics. For example, Experian developed the Small Business Credit ShareTM model for Construction — a purpose-built commercial risk score tailored specifically to businesses with construction trades. The model: Uses advanced machine learning methodology (XGBoost) Predicts the likelihood of becoming 61+ days beyond terms within 12 months Incorporates aggregate business data, public records, trade data, and construction-specific attributes Produces a score range of 300 to 850, where higher scores indicate lower risk Performance testing shows improved KS and GINI separation compared to generic all-industry models, as well as stronger bad capture rates in the lowest scoring deciles. In practical terms, that means: Better identification of high-risk borrowers Improved differentiation among mid-tier applicants More confident credit line sizing Smarter portfolio monitoring For lenders balancing growth objectives with capital discipline, industry-optimized analytics can materially improve decision accuracy. Learn More about Experian SBCS Construction Score Strategic Implications for Chief Risk Officers As we move further into 2026, construction presents a paradox: - Strong sector growth - Elevated credit demand - Tightening lending standards - Persistent payment delays - Increased reliance on alternative capital The strategic question for CROs is not whether to participate in construction lending — it is how to do so with precision. Key considerations include: Are your underwriting models calibrated to sector-specific risk patterns? Are you distinguishing between structural credit usage and distress signals? Are portfolio limits aligned to trade-level risk differentiation? Are you leveraging machine learning where appropriate to isolate “bads” earlier? In a tighter credit market, competitive advantage often comes from accuracy — not volume. Growth Requires Discipline Construction will remain a critical growth engine for the U.S. economy in 2026. Demand is real. Infrastructure investment is accelerating. Capital needs are expanding. But so are constraints. For lenders and risk leaders, the opportunity lies in balancing participation with discipline — using analytics sophisticated enough to separate resilient operators from liquidity-stressed borrowers. The cranes are rising.Capital is tightening. In 2026, growth will be available. Precision will be decisive. 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

For many Chief Risk Officers, credit portfolio management can feel like a constant exercise in damage control. A spike in delinquencies is reported in the monthly update. A sector suddenly underperforms. The board asks whether the risk appetite still holds, after the fact. This reactive posture isn’t the result of poor risk discipline. It’s the result of portfolio management approaches built for a slower, more predictable credit environment. Today’s commercial and small business portfolios move faster, fragment across industries, and respond quickly to macro and behavioral shifts. To stay ahead, CROs must evolve credit portfolio management from firefighting to forecasting. Why Traditional Credit Portfolio Management Keeps CROs in Reaction Mode Many portfolio management programs still rely on legacy practices: - Lagging indicators such as delinquency and charge-off trends- Static, periodic reporting rather than continuous insight- Limited segmentation that masks pockets of emerging risk- Manual analysis that slows decision-making The result is a cycle CROs know well: risk becomes visible only once it has already materialized. By then, options are fewer, and corrective actions are more disruptive to growth and customer relationships. In volatile economic conditions, especially within small business portfolios, this approach exposes institutions to unnecessary risk and earnings volatility. The CRO’s Mandate Has Changed Modern CROs are no longer measured solely on loss avoidance. They are expected to: - Enable profitable growth while maintaining discipline- Translate risk appetite into day-to-day decisions- Anticipate risk before it shows up in losses- Communicate forward-looking insights to executives and boards That requires a fundamentally different approach to credit portfolio management; one that emphasizes early signals, segmentation, and scenario analysis, not just historical performance. What “Forecasting” Looks Like in Credit Portfolio Management A forecasting-oriented portfolio management framework rests on four pillars: Risk Appetite That Is Operational, Not Theoretical Effective forecasting starts with a clearly defined risk appetite that is embedded into portfolio segmentation, exposure limits, score bands, and monitoring thresholds. CROs move beyond static policy statements to measurable guardrails that guide growth and risk-taking in real time. Granular, Dynamic Portfolio Segmentation Rather than viewing the portfolio as a single aggregate, CROs segment by:Industry and geographyBusiness size and lifecycle stageCredit score bands and blended risk profilesProduct, tenure, and exposure concentrationThis level of segmentation allows risk leaders to spot early deterioration in specific pockets, before it becomes a portfolio-wide issue. Early-Warning Signals and Ongoing Monitoring Forecasting depends on identifying changes in behavior, not just outcomes. Shifts in payment performance, utilization, score trends, or public records provide valuable signals that risk is evolving. When these signals are monitored continuously and tied to clear action thresholds, CROs gain time, the most valuable asset in risk management. Scenario Analysis and Forward-Looking Analytics True forecasting requires asking “what if?”• What happens if rates stay higher for longer?• What if a key sector experiences a sudden demand shock?• How would losses and capital needs change under stress?Forward-looking portfolio analytics allow CROs to test assumptions, model outcomes, and guide strategic decisions before conditions deteriorate. Turning Portfolio Data Into Predictive Insight One of the biggest challenges CROs face is not a lack of data, but a lack of integrated analytics that turn data into insight. Portfolio forecasting requires: Access to high-quality commercial and small business data The ability to blend internal performance data with external risk indicators Flexible analytics environments where teams can test, validate, and refine models Dashboards that surface trends and outliers without weeks of custom reporting This is where modern analytics platforms become essential. How Experian Supports Predictive Credit Portfolio Management Experian’s Ascend Commercial Suite™ is designed to help risk leaders move beyond static portfolio reviews toward continuous, insight-driven portfolio management. Ascend Commercial Suite is an integrated analytics platform that brings together data, modeling, benchmarking, and portfolio analysis in a single environment. Key capabilities that support forecasting-oriented portfolio management include: Portfolio Performance Monitoring and DashboardsAscend enables risk teams to create interactive dashboards that are directly connected to portfolio and market data. This allows CROs to: Monitor portfolio performance continuously Identify emerging areas of strength or concern Reduce reliance on manual, recurring reports Advanced Analytics and Model Development With access to Experian’s proprietary commercial and small business data, along with client-owned data, risk teams can: Develop and validate new credit and risk models Monitor existing models for performance and stability Meet regulatory expectations for ongoing model validation Blended and Small Business Risk Analysis For portfolios that rely on personal guarantees or serve small and micro businesses, Ascend supports blended analysis using both commercial and consumer credit data. This provides a more complete view of risk and supports more accurate segmentation and forecasting. Benchmarking and Peer Analysis Ascend’s benchmarking capabilities allow CROs to compare portfolio performance against peer populations and market segments, helping to contextualize risk trends and identify opportunities for adjustment before performance diverges materially. Together, these capabilities help CROs replace reactive portfolio reviews with proactive, data-driven risk steering. "Looking at how similar businesses performed across the broader market helped us move from reactive decisions to forward-looking ones, especially when evaluating new segments and understanding expected loss rates before expanding."Arun Narayan, Chief Product Officer From Firefighting to Confidence When credit portfolio management is built around forecasting rather than reaction, CROs gain: Earlier visibility into emerging risk Smoother, more deliberate policy adjustments Greater confidence in growth strategies Stronger, more credible communication with boards and regulators The goal isn’t to eliminate risk, that’s impossible. The goal is to see risk forming early enough to manage it on your terms. Talk with Experian’s commercial risk experts about strengthening your credit portfolio management strategy with forward-looking analytics and insights. Get In Touch Learn more about how Experian Ascend Commercial Suite can help you monitor, analyze, and forecast portfolio risk with confidence. Learn more Related Posts

The independent workforce is booming, but traditional financial services have struggled to keep pace. On a recent episode of Experian Business Chat, Michael Zevallos, co-founder of Giggle Finance, shared how his FinTech is bridging this critical gap for gig workers and micro-small businesses. Watch Our Interview The Problem: A Broken System for Independent Workers With over 10 years of experience in online lending and FinTech, Michael witnessed firsthand how the financial system failed anyone outside traditional W2 employment or large commercial businesses. During his time at OnDeck, starting in 2011, he witnessed numerous independent contractors and micro-small businesses being completely shut out of credit markets. "It wasn't just about meeting underwriting guidelines," Michael explains. "Smaller deals just didn't generate enough profitability. There were too many hands in the cookie jar—underwriters, salespeople, loan brokers, loan closers—all trying to interact with these deals." The traditional system relies on predictable W2 paychecks and consistent business histories spanning five-plus years. But gig workers operate differently. An Uber driver might work 10 hours one week, 20 the next, and zero the week after. This variability, while reflecting the freedom of independent work, made them invisible to traditional lenders. A Market Opportunity Hiding in Plain Sight What started as a niche problem became impossible to ignore. In 2020, the independent workforce became the fastest-growing segment of the economy. Suddenly, tens of millions of Uber drivers, barbers, content creators, online sellers, and freelancers needed financial services that simply didn't exist for them. That's when Michael and his co-founders launched Giggle Finance. Flipping the Script on Risk Assessment Traditional credit markets look backward, reviewing historical output, past credit scores, and established track records. But as Michael points out, "It captures your past, but it doesn't capture your present or more importantly, your future." Giggle Finance partnered with Experian to develop a more nuanced approach to risk: Experian's Clear Credit Risk and Clear Inquiry go beyond traditional credit files to identify different patterns of behavior and risk signals that matter for independent workers. This allows them to go beyond a traditional credit report, predict risk more accurately, and approve the right customers. NeuralID Technology analyzes how customers interact with the application itself, detecting fraud while building confidence in legitimate applicants. The Experian SMB Marketplace connects Giggle with customers who genuinely care about and value their credit, allowing them to approve more applications with greater confidence. The result? Giggle can assess risk and approve applications in under 10 minutes, requiring just 90 days of cash flow activity to get started. "Consider a freelance marketer who could previously handle two or three clients. With AI tools for content creation and analytics, they can now manage five or six times that workload."Michael Zevallos, Co-Founder The AI Revolution in Independent Work The conversation took an interesting turn when discussing how AI is reshaping the gig economy. While most people think about AI's impact on large enterprises, Michael sees it transforming independent contractors in profound ways. "Gig workers aren't just drivers or delivery couriers anymore," he notes. "They're becoming creators, consultants, designers—more tech-savvy and capable than ever before." Consider a freelance marketer who could previously handle two or three clients. With AI tools for content creation and analytics, they can now manage five or six times that workload. Many solopreneurs are evolving into full-fledged agencies, keeping headcount low while scaling to dozens of customers. From Emergency Funding to Growth Capital This AI-enabled transformation has fundamentally shifted why customers seek financing. Historically, small business owners came to Giggle because of emergencies—they needed to make payroll or cover an unexpected expense. Now, increasingly, they're seeking growth capital. The Uber driver who becomes a limousine company owner. The logo designer who can now produce dozens of designs using AI tools. These entrepreneurs need funding to hire people, invest in equipment, and market their expanding businesses. "That structural shift is very exciting for both the customers and for us at Giggle," Michael says. Building Long-Term Relationships Giggle isn't just there for a one-time transaction. Some customers have been funded over 20 times across four years, with Giggle supporting them through various business evolutions. Uber drivers have become truckers. Others have launched limousine companies. The relationship grows as the business grows. Looking ahead, Giggle plans to expand its offerings, including a potential line of credit product for more mature businesses. The goal is to remain flexible and responsive to changing business needs at every stage. The Path Forward: Collaboration Michael sees tremendous opportunity for banks and FinTechs to work together serving the gig economy. Banks bring trust, established brands, and balance sheets. FinTechs like Giggle bring product innovation, technology, and user experience. "If you put those strengths together, you can build a financial system that truly serves gig workers, independent contractors, and micro-small businesses," he explains. Giggle's technology can underwrite customers in seconds using real-time income data and AI, while bank partnerships could provide credit at scale. A Market That's Only Getting Bigger When Giggle launched in 2020, there were approximately 30 million independent workers in the United States. Today, that number has more than doubled to 70 million. By 2030, Experian and Giggle believe the independent contractor workforce will surpass the traditional W2 economy. "Everybody's a small business. Whether it's a college student with an Etsy store, a professional with a side consulting practice, or a full-time independent contractor, the entrepreneurial spirit is becoming the norm rather than the exception."Ekaterina Gaidouk, VP of Marketing Getting Started For entrepreneurs and small business owners interested in learning more, Giggle Finance operates entirely online at www.gigglefinance.com. The application process takes less than 10 minutes, and approved customers can have funds in their bank account the same day—no human intervention required. In an age where the nature of work is rapidly evolving, Giggle Finance represents a new approach to financial services: one that recognizes independent workers not as risky outliers, but as the future of the American economy. 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