Commercial Pulse Report | 09/03/2025 The latest Experian Commercial Pulse Report (September 3rd, 2025) gives us a fascinating look at where small businesses stand today. Sure, things are a bit tight right now with lending getting stricter and some credit stress showing up. But zoom out a little, and you'll see something remarkable: small businesses have completely transformed themselves over the past few years. We're talking about one of the biggest shifts in modern business history. Companies that used to move at a snail's pace have become nimble, tech-savvy operations that can pivot on a dime. Watch the Commercial Pulse Update The Economy Right Now: It's Complicated As we mentioned in the Macroeconomic section of the report, the current economic picture presents a complex mix of signals. Inflation sat at 2.7% in July, unemployment remains relatively low at 4.2%, and wages continue to climb. These indicators are largely positive, even as companies moderate their hiring pace. Here's what's encouraging: small business owners are feeling more optimistic. The NFIB confidence levels are actually above the 52-year average—a real turnaround after months of uncertainty. And people are still starting businesses like crazy. We saw 471,000 new business applications in July alone. That tells you something about the American entrepreneurial spirit. The Stress is Real, But So is the Strength Now, Experian's Small Business Index did drop to 32.8 in July—that's nearly 12 points down from the month before. It sounds scary, but it's more about early warning signs. What's happening is that business owners are feeling the squeeze personally. Banks are being pickier about loans, and more people are falling behind on their bills, creating a ripple effect. Add in student loan problems and a job market that's not quite as hot as it was, and you can see why household budgets are getting tight. But—and this is important—small businesses themselves are holding steady. Their loan payments are on track, and all that optimism and new business formation we mentioned? That shows real possibility. The Real Story: Three Chapters of Change Here's where it gets interesting. If you look at the past seven years, small business evolution breaks down into three clear chapters: The Slow Years (2018-early 2020): Back then, most small businesses were still doing things the old-fashioned way, to put it. Maybe they had a basic website, but they were primarily brick-and-mortar operations with everyone working in the office. Change happened, but it was gradual. The Panic Years (2020-2022): Then COVID hit like a freight train. Suddenly, businesses that had been putting off going digital for years had to figure it out in weeks. Contactless everything, working from home, completely changing how they operated—it was sink or swim time. The government threw lifelines to help businesses survive, and amazingly, a ton of new entrepreneurs jumped into the pool. It was chaotic, but it worked. The Smart Years (2023-2025): This is where we are now, and it's pretty impressive. Small businesses aren't just surviving—they're thriving with tools that seemed like science fiction just a few years ago. They're using AI to understand their customers better, running hybrid operations that blend online and offline seamlessly, and many are taking sustainability and cybersecurity seriously. They're meeting customers wherever they are—online, in stores, on social media—and making it feel personal. Go to any Starbucks and see how many customers walk in and pick up their order vs stand in line. The numbers back this up: 38% more businesses established commercial credit between 2018 and 2023. New business formation is still 51% higher than before the pandemic. And here's the kicker—businesses started in 2023 actually look more financially stable than the ones from earlier years. What This Means Going Forward Here's the bottom line: yes, small businesses are dealing with some headaches right now. Credit is tighter, money's a bit harder to come by, and everyone's feeling the economic uncertainty. But these aren't the same small businesses that existed five years ago. They've been through the fire and came out stronger, smarter, and more flexible. They know how to adapt because they've had to do it—fast. For banks, policymakers, and anyone else trying to support small business, the key is remembering that short-term pain doesn't erase long-term progress. We've built a more dynamic, resilient small business ecosystem. This transformation continues to evolve. Recent history has demonstrated that small businesses can adapt more rapidly than traditional models predicted. The next phase of this evolution will likely build on these foundations of enhanced agility and technological integration. For the full analysis, including all small business credit trends, read the latest Experian Commercial Pulse Report. ✔ 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

The Experian Small Business Index™ declined month-over-month by almost 12 points. July 2025 Index Value (Jul): 32.8 Previous Month: 44.7 MoM: -11.9 YoY: -16.8 (Jul 2024 = 49.6) The Experian Small Business Index™ declined in July to 32.8, down 11.9 points. Small businesses still look healthy, but business owners are starting to show some stress in their consumer credit profiles. The primary driver was tighter lending conditions, which reduced approval rates and increased delinquencies for consumers. Pressure has built on the small business owner due to rising student loan defaults and a softer labor market, which is beginning to erode consumer credit health. Inflation has remained even, with slight upticks in some sectors and slight decreases in others. Rent inflation continues a downward trend; it was 3.8% in June, down from 3.9% in May. Producer price inflation was also down 0.4 points to 2.3%, reaching its lowest level since September 2024. Some sectors had inflation rise, with food inflation up slightly from May to 3.0% from 2.9%, overall inflation was up 2.7% in June from 2.4% in May, and core inflation increased from 2.8% in May to 2.9% in June. The savings rate decreased to 4.5% in May, down from 4.9% in April, as consumers continue to spend. Explore Experian Small Business Index Related Posts

Experian Commercial Pulse Report Outstanding student loan debt in the U.S. has reached an all-time high of $1.63 trillion, and the ripple effects are being felt far beyond the personal finance arena. This unprecedented debt burden is now shaping the way many small business owners borrow, manage credit, and maintain financial stability. Watch the Commercial Pulse Update This week, the Commercial Pulse Report reveals a clear and growing link between student loan obligations and small business credit performance. For lenders, policymakers, and business leaders, this is a trend that can’t be ignored. The Scale of the Challenge Student loan balances have surged over 550% since 2003, rising from roughly $250 billion to more than $1.6 trillion in early 2025. Even during the pandemic-era repayment moratorium, when interest was frozen and payments paused, balances continued to grow — albeit modestly, by just 2.9%. Policy shifts, such as the recently enacted One Big Beautiful Bill Act, are set to reshape the student loan landscape yet again — from changes in borrowing limits to the sunset of certain repayment plans. As these changes take effect, they will inevitably influence the personal financial health of millions, including business owners who are navigating both consumer and commercial credit obligations. Student Loan Debt Among Business Owners Experian’s data shows that approximately 5% of business owners currently carry student loan debt — up from 4% in 2019. While that may seem like a small slice of the business population, the growth rate is significant and points to a deeper shift in borrowing dynamics. Also, since 2020, when some federal student loan repayments were forgiven or paused, business owners with student loans have been opening a larger share of new commercial credit accounts. In 2019, they represented 11% of new account openings. By 2025, that share had risen to 14%. This suggests that temporary relief on personal loan payments may have freed up capacity for some entrepreneurs to access additional business credit — a trend worth watching as repayment requirements return in full force. Risk & Performance Differences Our data also shows clear performance gaps between business owners with and without student loans: Delinquency rates are higher for those with unpaid government-backed student loans, especially among newer businesses. In 2023, 4% of new businesses with these loans had a 90+ day delinquency, compared to 3% for owners without student loans. Credit risk scores tell a similar story: owners without student loans average a score of 58, versus 53 for owners with unpaid government loans. Business stability also differs. Owners without student loans tend to have longer operating histories, higher commercial balances, and more active credit accounts — all indicators of stronger credit health. For lenders, this means personal debt load isn’t just a side note; it can be a leading indicator of small business credit behavior and repayment risk. Implications for Lenders & Policymakers As personal and commercial credit health become increasingly interconnected, financial institutions may need to refine their risk models to account for personal debt obligations like student loans. Underwriting: Integrating consumer credit insights into business credit assessments could help identify early warning signs. Portfolio management: Segmenting accounts by student loan status may reveal patterns in repayment behavior and growth potential. Policy considerations: As student loan repayment policies shift, small business access to credit , and their ability to maintain healthy repayment patterns could change in tandem. The $1.63 trillion student loan burden isn’t just a consumer finance story — it’s a small business credit story, too. As more entrepreneurs carry this debt, the link between personal obligations and business performance will only grow stronger. Understanding and monitoring this crossover trend is essential for informed decision-making, whether you’re extending credit, managing a portfolio, or shaping policy. For the full analysis, including all small business credit trends, read the latest Experian Commercial Pulse Report. ✔ 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 Great Recalibration Experian is very pleased to announce the release of the Q2 2025 Main Street Report. Brodie Oldham from Experian Commercial Data Science unpacks insights from the latest Main Street Report. Watch Quarterly Business Credit Review Webinar Main Street Recalibrates for a New Normal U.S. small businesses are demonstrating exceptional adaptability amid a complex post-pandemic economic environment. Inflation remains elevated above 3%, interest rates are steady between 4.25% and 4.50%, and global trade dynamics continue to introduce volatility. Despite these pressures, small firms are showing resilience, driven by improved digital capabilities, disciplined fiscal management, and a steady flow of entrepreneurial activity. In Q2 2025, an average of 447,000 new business applications were filed, with significant contributions from minority and younger founders. The Experian Small Business Index™ held steady, credit conditions remained tight. Traditional lenders continued to restrict approvals, with just 13% of applications approved by large banks. In response, small businesses increasingly turned to fintech and embedded finance solutions for faster, data-driven access to capital. Borrowing behaviors are shifting. The average small business credit card APRs now exceed 25%, firms are transitioning toward installment loans that offer structured repayment terms. Download the latest report for more insight. Download Q2 Main Street Report Related Posts

The experts from Experian reviewed recent small business credit performance. Experian’s Brodie Oldham, VP of Commercial Data Science, and Marsha Silverman, Strategic Analytic Consultant revealed several insights on how small businesses are performing during the Q2 Quarterly Business Credit Review. Inflation was also a big focus of the webinar. Brodie talked about inflation trends and highlighted insights from a recent CFO survey conducted with the Richmond Fed. It says more than 40% of CFOs expect to pass increased costs on to consumers, impacting inflation in both goods and services sectors. Brodie also explored the Federal Reserve's potential actions as inflation rises alongside a softening labor market and strong economy. Will we see a rate cut this year? Marsha Silverman explored the significant increase in new business formations in the United States following the pandemic. Before COVID-19, approximately 300,000 businesses were registering monthly with the US Census, but this number has surged to around 440,000 per month – a 50% increase. This growth is evident across all regions, especially in the southern US, driven by population migration to warmer climates. Additionally, Experian talked about the impact on lending, noting a rise in commercial credit issued to younger businesses within their first two years. Originally Presented:Date: Tuesday, August 19th, 2025Time: 10:00 a.m. (Pacific) / 1:00 p.m. (Eastern) Audience Poll Responses During the webinar we asked the audience the following questions and here is how they responded. Which macroeconomic factor is having the greatest impact on small business credit conditions this year? What actions if any have you taken in 2025 in response to additional tariff ? How are small businesses adapting to tighter credit conditions in 2025? Our Presenters: More reasons to watch: Leading Experts on Commercial and Macro-Economic Trends Credit insights and trends on 30+ Million active businesses Industry Hot Topics Covered (Inclusive of Business Owner and Small Business Data) Commercial Insights you cannot get anywhere else Peer Insights with Interactive Polls (Participate) Discover and understand small business trends to make informed decisions Actionable takeaways based on recent credit performance Watch On-Demand Related Posts

As temperatures rise across the U.S., so does the nation’s appetite for travel—and the Leisure & Hospitality sector is feeling the heat. In this week's Commercial Pulse Report, we examine how soaring consumer demand intersects with evolving credit conditions for businesses in travel, lodging, and transportation. Travel Rebounds, But the Story Is Mixed By every measure, Americans are traveling in droves. AAA projected over 72 million domestic travelers over the July 4th holiday—setting a record. Meanwhile, Memorial Day travel surged across all transportation types, especially road trips, which saw a 3.0% year-over-year increase. However, despite six new TSA checkpoint records in June, major airlines have cut forward-looking forecasts, signaling a notable shift: travelers are increasingly opting for alternatives like road and rail over the skies. This change in travel behavior has direct implications for how different business subsectors access and manage credit. Infrastructure Drives Commercial Credit Trends The Leisure & Hospitality industry is broad and fragmented—from mega-airlines and hotel chains to small sightseeing operators and independent RV campgrounds. This diversity is reflected in commercial credit data. Businesses with heavy infrastructure needs—like airlines and hotels—tend to carry higher loan and credit line balances. Airlines, in particular, average the highest number of commercial trades, a reflection of their large-scale operations and capital intensity. Hotels also hold sizeable credit, but with a twist. While revenues have rebounded beyond pre-pandemic levels, occupancy rates remain flat due to an increase in room supply from new construction. The hotel pipeline stood at 6,211 projects with over 722,000 rooms as of Q3 2024, signaling sustained investment even amid margin pressures. Rental Cars: High Volume, Higher Risk The rental car sector stands out—but not in a good way. Despite being a key enabler of domestic travel, these businesses exhibit the highest commercial credit risk across the industry. According to Experian’s Commercial Risk Classification, 32% of rental car companies are considered Medium-High to High Risk, compared to less than 10% in categories like air transport and sightseeing. The elevated risk may be due to a combination of factors: fleet acquisition costs, multi-location exposure, and operational disruptions during the pandemic. While credit trades in this segment remain high, inquiries have declined over recent years, possibly reflecting tightening lending standards or constrained demand for new credit. Encouraging Risk Trends—With Exceptions Across the broader Leisure & Hospitality industry, there’s been a decline in commercial credit risk since 2020. The share of businesses classified as Medium-High or High Risk dropped from 11.7% to 8.5% as of April 2025. Most firms now fall into the Medium Risk category—a sign of normalization in the sector. Delinquency rates remain low (under 1%), and the average Intelliscore Plus v2 score has remained stable across most subsectors. Still, credit conditions vary sharply by business type, underlining the importance of nuanced risk assessment in portfolio management. Smarter Credit Allocation Starts with Subsector-Level Insight The summer travel surge is a powerful reminder of the sector’s resilience—but not all players are experiencing the boom equally. For credit professionals and commercial lenders, the latest data from Experian suggests a growing divide: infrastructure-heavy firms are leaning into credit, while high-risk subsectors like rental cars may warrant closer scrutiny. Whether your clients are in air transport or roadside accommodations, understanding these credit trends will be key to navigating the second half of 2025. ✔ 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™ was stable month-over-month, with a slight decrease to 44.7 in June. June 2025 Index Value (Jun): 44.7 Previous Month: 45.2 MoM: -0.5 YoY: -10.7 (Jun 2024 = 55.4) The index has evened out and remains relatively stable as the economy continues to operate on sound footing. Unemployment remains low and hourly wages continue to increase, and the economy added 147K jobs in June, a slight increase over May. Consumers are optimistic, and sentiment increased to 60.7, up from 52.2 in May. Small business optimism was steady at 98.6 in June, 0.2 points lower than May. Consumers continue their trend of starting new businesses, with 457K launched in June, a 2.2% increase over May. Inflation has remained even, with slight upticks in some sectors and slight decreases in others. Rent inflation continues a downward trend; it was 3.8% in June, down from 3.9% in May. Producer price inflation was also down 0.4 points to 2.3%, reaching its lowest level since September 2024. Some sectors had inflation rise, with food inflation up slightly from May to 3.0% from 2.9%, overall inflation was up 2.7% in June from 2.4% in May, and core inflation increased from 2.8% in May to 2.9% in June. The savings rate decreased to 4.5% in May, down from 4.9% in April, as consumers continue to spend. Explore Experian Small Business Index

As the automotive sector adapts to rising vehicle prices, shifting consumer behavior, and persistent inflation, the ripple effects are clearly visible in commercial credit activity. Experian’s latest Commercial Pulse Report (July 22, 2025) dives deep into the evolving credit dynamics within the auto industry—and one trend is clear: credit access is contracting across nearly every segment. Used Cars Rise, But Credit Lines Fall With the average new vehicle price exceeding \$47,000, many consumers are opting for used cars, priced more affordably at just over \$28,000. This shift has helped drive consistent growth in the used-car market, accompanied by an uptick in business activity and a growing demand for commercial credit. In fact, used-vehicle and aftermarket service providers have seen commercial credit inquiries jump approximately 20% above January 2021 levels. Their credit utilization rate now sits at 32%, reflecting the costs of managing larger inventories and higher parts prices. But unlike traditional signs of financial distress, this trend appears tied more to operational needs than liquidity crunches. Despite the increased appetite for credit, credit limits are shrinking. A Cross-Sector Credit Contraction Across the entire automotive supply chain, from OEMs to aftermarket shops, businesses are receiving smaller commercial credit lines on new originations than in previous years. The declines are significant: OEMs and New-Vehicle Dealers: Average commercial card limits have dropped by \$7.6K, now sitting at \$9.7K compared to \$17.4K in 2022–2023. Used-Vehicle Dealers and Aftermarket Services: Limits have fallen by \$5.8K, from \$13.6K to \$7.8K. Vehicle and Parts Wholesalers: These businesses faced the steepest cut—\$8.9K on average, down from \$18.5K to just \$9.6K. All subsectors experienced over a 40% reduction in average credit lines, signaling tighter lending conditions despite robust business activity in several parts of the industry. Why Are Credit Lines Shrinking? This broad contraction is not purely about borrower risk. In fact, many used-car and aftermarket businesses have maintained steady commercial risk scores, and delinquency rates remain relatively flat. A few critical factors include: Elevated Interest Rates: High financing costs are squeezing margins, especially for OEMs and franchised new-car dealers, where delinquencies are rising. Lenders may be proactively managing exposure. Segment-Specific Risk Trends: OEMs and dealers are facing mounting late-stage delinquencies—91+ DPD rates have nearly doubled since 2022—and their average risk scores are down ~4 points. Economic Uncertainty: Despite stable employment and wage growth, inflation, Fed policy, and geopolitical risk (like tariffs) are prompting more conservative credit practices. Portfolio Diversification: Lenders may be redistributing credit availability to less volatile sectors or industries with higher recovery potential. The Middle Squeeze: Wholesale Distribution Among the three major segments—OEM/New-Car Dealers, Used-Vehicle & Aftermarket, and Wholesale Distribution—wholesalers are caught in the middle. Their delinquency and risk score trends resemble those of OEMs, but their growing credit utilization and inquiry rates mirror the aftermarket segment. This dual exposure to shrinking new car volumes and rising parts demand puts them in a uniquely vulnerable position. What It Means for Credit Managers and Lenders These trends underscore the importance of granular credit monitoring. Treating the auto industry as a single credit risk profile is no longer viable. Subsector segmentation—by vehicle type, service focus, or market exposure—is key to understanding which businesses are truly at risk and which remain stable but under credit strain. For lenders, this is a time to rebalance risk models and align credit policies with real-time sector insights. For businesses, it’s a moment to double down on credit management and strategic planning. Stay ahead with Experian ✔ 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

Small Businesses remain resilient amid rate uncertainty and signs of job market weakness May 2025 Index Value (Apr): 45.2 Previous Month: 43.2 MoM: +2.0 YoY: -9.8 (May 2024 = 55.0) Last month’s dip was short-lived as May's economic figures remained strong, showcasing the continued resilience of the U.S. economy. Reduced tariffs, especially on China, eased market concerns amid ongoing trade talks. The unemployment rate remained steady at 4.2% and wages continued to rise. New business starts remained stable at 447K in May, close to the monthly average of 441K since July 2020, and still well above pre-pandemic levels. Consumer sentiment and small business optimism increased after recent declines, though uncertainty still affects these surveys. Consumer sentiment was 98.8 in May, a 3-point increase over April, but 11% lower than a year ago. Inflation news was mixed: overall and food inflation saw slight upticks, while core inflation stayed flat and rent inflation dropped to its lowest since November 2021. The Fed's cautious approach persists, but predictions of a rate cut in the coming months are growing as inflation remains relatively steady and potential signs of job market weakness emerge. Explore Experian Small Business Index

Commercial Pulse Report | 7/1/2025 This week the Experian Commercial Pulse report focuses in on a fascinating paradox in the e-commerce industry that credit and risk management professionals should closely monitor. While online retail revenues continue their upward trajectory—now representing over 16% of total U.S. retail sales and generating quarterly revenues exceeding $300 billion—commercial credit inquiries from e-commerce businesses have declined by nearly 25% in the past year alone. This counterintuitive trend reveals important insights about business maturation, cash flow management, and evolving credit risk profiles in the digital commerce space. Watch our Commercial Pulse update to hear the details. Market Consolidation in Action The e-commerce landscape is undergoing significant consolidation. Despite the U.S. hosting nearly 14 million of the world's 30+ million e-commerce websites, the total number of e-commerce businesses declined by 13.1% between 2024 and 2025. This contraction, following explosive growth during the pandemic years, suggests the sector is moving beyond its initial growth phase into a more mature, efficiency-focused stage. For credit professionals, this consolidation presents both opportunities and challenges. Fewer new entrants mean reduced origination volumes, but surviving businesses may represent stronger, more creditworthy prospects. The Credit Demand Decline: Key Metrics The data reveals several critical trends in e-commerce credit behavior: Credit Inquiry Patterns: 2023 to 2024: 24.9% decrease in commercial credit inquiries Average credit accounts per business: Just over 2 accounts Average new credit amount: $32,000 (below pre-pandemic levels of $37,000) Historical Context: The current average credit amount represents a significant decline from the 2020 peak of $41,000, when federal COVID relief programs supplemented traditional lending. This normalization suggests businesses are operating with more realistic capital requirements and improved cash management. Strong Credit Performance Indicators Despite reduced credit demand, e-commerce businesses are demonstrating exceptional credit management: Delinquency Improvements: 60-day past-due rates: Decreased by 50% over four years (from 0.46% to 0.23%) 90-day delinquency rates: Following similar downward trend Commercial credit scores: Now above pre-pandemic levels Utilization Efficiency: Current utilization rate: 39% (down from 43.5% in 2020) Trend indicates improved cash flow management and conservative credit usage Strategic Implications for Credit Professionals 1. Portfolio Quality EnhancementThe improving delinquency rates and lower utilization suggest that e-commerce businesses requesting credit today may represent higher-quality prospects than in previous years. This sector's financial discipline could make it an attractive target for lenders seeking low-risk commercial accounts. 2. Origination Strategy AdjustmentWith credit inquiries down significantly, lenders may need to be more proactive in their e-commerce outreach. The reduced inquiry volume doesn't necessarily indicate reduced creditworthiness—it may simply reflect better cash management by these businesses. 3. Risk Modeling ConsiderationsThe sector's improved risk profile suggests that traditional risk models may need recalibration. E-commerce businesses that weathered the post-pandemic consolidation may deserve more favorable risk assessments than historical data might suggest. 4. Competitive PositioningAs fewer lenders may be focusing on this sector due to reduced demand, there could be opportunities for institutions willing to develop specialized e-commerce credit products and expertise. Market Outlook and Uncertainties While the e-commerce sector shows strong fundamentals, broader economic uncertainties remain, including: Potential tariff impacts on international supply chains Federal Reserve interest rate policy decisions Global energy market volatility These factors could influence future credit demand and risk profiles across all sectors, including e-commerce. The key takeaway: declining credit demand in e-commerce doesn't signal sector weakness—it indicates strength. Businesses that have survived the consolidation phase while maintaining strong cash flows and excellent credit performance may represent some of the most attractive commercial credit prospects in today's market. Stay Ahead with Experian ✔ 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

In an era of economic change and rapid entrepreneurial growth, small business lenders are rethinking how they assess creditworthiness. Traditional business credit models, while useful, often fall short in evaluating the full financial picture of today’s small business owners, many of whom are new to the market, operate as sole proprietors, and blur the lines between personal and business finances. To address these gaps, financial institutions are increasingly turning to blended credit scores, which combine consumer and business credit attributes to create a more holistic risk profile. Blended credit scoring is not a new concept, but its relevance has surged in recent years. As market conditions fluctuate and the composition of small business customers evolves, this approach offers a more accurate, inclusive, and strategic method for making credit decisions. It enables lenders to better serve emerging entrepreneurs, deliver personalized financial solutions, and retain customers in a competitive financial services landscape. A changing landscape for small businesses and the rise of new data sources for assessing credit risk One of the most compelling reasons to adopt blended credit scoring is the dramatic increase in new business formation. According to the U.S. Census Bureau, Americans have continued to launch new businesses at historically high rates. In April 2025 alone, over 450,000 new business applications were filed, maintaining a trend that began during the COVID-19 pandemic and has yet to slow down1. This surge in entrepreneurship has fundamentally changed the profile of small business borrowers. Many of these new businesses are sole proprietorships or microenterprises with limited or no business credit history. Relying solely on business credit data in such cases can lead to incomplete or misleading assessments. Blended credit scores fill this gap by incorporating the personal credit behavior of business owners, offering a more comprehensive view of their financial reliability. For example, a first-time entrepreneur may have a strong personal credit history but no established business credit. A traditional model might flag this as high risk, while a blended model would recognize the individual’s responsible financial behavior and adjust the risk assessment accordingly. This not only improves access to capital for deserving borrowers but also helps lenders expand their portfolios with greater confidence. Personalization at scale: delivering the right offer at the right time to small business clients Another key advantage of blended credit scoring is its ability to support personalized financial offerings. In today’s digital-first economy, small business owners expect the same level of customization and responsiveness from their financial institutions as they do from consumer brands2. Meeting these expectations requires a deep understanding of each customer’s unique financial situation, something that blended scores are well-equipped to provide. Research from industry leaders highlights the growing importance of personalization in financial services. Customers are more likely to engage with and remain loyal to institutions that offer relevant, timely, and tailored solutions2. Blended credit data enables this by revealing patterns and preferences that might otherwise go unnoticed. Consider a small business owner who uses personal credit cards to finance business expenses. A lender relying solely on business credit data might miss signs of financial strain or opportunity. With a blended score, however, the lender can detect shifts in spending behavior, anticipate credit needs, and proactively offer solutions—such as a business line of credit or working capital loan—before the customer even asks. This proactive approach not only enhances customer experience but also strengthens the lender’s position in the market. By delivering the right offer at the right time, financial institutions can build long-term relationships, increase wallet share, and reduce churn. Protecting market share: managing the consumer-business credit overlap Another reason why blended credit scores are gaining traction is the increasing overlap between consumer and business financial portfolios3. For many small business owners, especially sole proprietors and freelancers, the line between personal and business finances is often blurred. They may use the same bank accounts, credit cards, or even loans for both purposes. It’s typical for the first two years for a business principal to leverage their own personal cash to infuse the business with capital and may take several years to establish separate accounts or a business credit profile. This convergence presents both a challenge and an opportunity for financial institutions. The scenario complicates risk assessment and product segmentation while presenting a need that gives lenders a chance to deepen customer relationships, preventing flight to a competitor—if managed correctly. According to the Federal Reserve’s 2023 Small Business Credit Survey, nearly 70% of small employer firms used personal funds to support their businesses. This statistic underscores the importance of viewing customers through a dual lens. A lender that fails to recognize the interconnectedness of personal and business finances can misjudge creditworthiness or miss cross-sell opportunities. Blended credit scores address this challenge by integrating data from both domains, allowing for more accurate underwriting and more strategic customer engagement. It also helps institutions identify at-risk customers who might be tempted to move their financial services elsewhere in search of better support. By offering integrated solutions that reflect the full scope of a customer’s financial life, lenders can increase loyalty and reduce the likelihood of default. The benefits of blended credit scoring are not just theoretical—they are being realized in practice by forward-thinking financial institutions. Fintech companies have embraced this approach to serving underbanked and emerging business segments. By leveraging alternative data and machine learning, they can assess risk more dynamically and inclusively. Traditional banks are also beginning to adopt blended models, to enable the approval of more loans, reduce default rates, and improve customer satisfaction. In a competitive lending environment, these advantages can be a competitive differentiator. Another major benefit for lenders is that blended scores support regulatory compliance and risk management initiatives. By providing a more complete picture of borrower behavior, they help institutions meet fair lending standards and avoid discriminatory practices. They also enhance portfolio monitoring, enabling early detection of potential issues and more effective intervention strategies. Despite its advantages, blended credit scoring is not without challenges. Data integration, privacy concerns, and model transparency are all important considerations. Financial institutions must ensure that they have the infrastructure and governance in place to manage and protect sensitive data. While blended scores offer valuable insights, they should complement human judgment and relationship management. Lenders must strike a balance between data-driven decision-making and personalized service. For small businesses, education is a key factor in gaining access to capital early on. Many small business owners are unaware of how their personal credit affects their business prospects or how to establish a business credit profile. Financial institutions have an opportunity to educate customers, promote responsible credit behavior, and build trust through transparency. As the small business landscape continues to evolve, so too must the tools used to support it. Blended consumer and business credit scores represent a smarter, more inclusive approach to credit decision-making. They reflect the realities of modern entrepreneurship, enable personalized engagement, and help financial institutions retain valuable customers in a competitive market. By embracing blended credit scoring, lenders can not only improve their bottom line but also contribute to a more equitable and dynamic small business ecosystem. In a time of uncertainty and opportunity, that’s a win for everyone. Want to learn more about Experian’s blended credit solutions? Visit our website for more details. Sources: 1 – US Census Bureau, Business Formation Statistics Monthly Data Release 2 – The Fintech Times, Personalization Takes Centre Stage in Financial Services for 2025, December 2024 3 – Federal Reserve and IRS Data, 2024, While specific government statistics on consumer-business credit overlap are limited, industry analysis and Federal Reserve research highlight the growing convergence of personal and business financial behaviors, especially among sole proprietors and small business owners. Related Posts

Commercial Pulse Report | 6/17/2025 Economic uncertainty is often seen as a deterrent to growth, but for many Americans, it’s become the fuel for a fresh start. As inflation wavers and traditional employment structures shift, more individuals are stepping out of corporate roles to pursue business ownership. In this week's Commercial Pulse Report, we take a closer look at what's driving this wave of entrepreneurial activity. Gen X Leads the Charge Toward Self-Employment According to Guidant Financial's 2025 Small Business Trends report, Generation X is leading the charge. Many in this age group are opting out of traditional career paths, motivated by a desire for autonomy, flexibility, and a more purposeful work life. According to Guidant’s report, Gen X holds the largest share of U.S. small business ownership, with a significant portion of these entrepreneurs transitioning from established careers. What’s driving this shift? Dissatisfaction with corporate life and a strong desire to be one’s own boss are leading motivators. It’s a story of experienced professionals reevaluating priorities and seeking more control over their financial future. And it appears to be a fulfilling decision—75% of small business owners report being happy with their choice to go independent. Retirement Savings Power New Ventures A surprising—but telling—statistic in ’s report: 53% of new business owners used 401(k) retirement funds to launch their ventures. This trend underscores a growing willingness to invest personal wealth into long-term entrepreneurial aspirations. Known as Rollovers as Business Startups (ROBS), this approach allows individuals to use retirement funds without early withdrawal penalties. It’s a bold move, signaling high confidence among business owners—but also highlighting gaps in access to traditional funding channels. Entrepreneurs are taking on more personal risk, in part because institutional capital isn't always accessible to young businesses. Interestingly, 56% of all new businesses are either newly founded or existing independent ventures, showing a diverse range of entrepreneurial approaches—from solo startups to revitalized legacy brands. The Credit Dillema for Young Businesses Experian’s data shows that businesses under two years old account for more than 50% of new commercial card originations. These companies are opting for credit cards over term loans due to fewer barriers to entry, but this often means lower funding limits. Meanwhile, newer businesses face steeper challenges securing traditional loans. They now represent just 15% of term loan originations, down from 27% in 2022. For lenders, policy makers, and service providers, these trends underscore the need to rethink how we support emerging businesses. From alternative funding tools to better credit-building pathways, there’s a growing opportunity to empower America’s newest entrepreneurs. Stay Ahead with Experian ✔ 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