If a new company has not yet established a credit history, many lenders turn to the business owner’s personal credit to evaluate risk. But does personal credit alone paint an accurate picture of a new business’s risk? Is there a more optimal way to determine how creditworthy a young company may be?

To find answers, Experian® randomly selected the credit files of 2.5 million U.S. small-business owners and compared them with the records of 1 million consumers. We then looked at the credit history of both groups, as well as key demographic data such as age, education and income. We also reviewed the number of open trades, delinquencies, bankruptcies and business survival rates. The results of this research are explained in this whitepaper.

Turning the page from recovery to growth, small businesses continue to have access to a wider availability of credit, as credit conditions reached the highest level on record, improving for the third consecutive quarter. Outstanding credit balances grew by 2.2 percent from a year ago, while delinquency rates declined to a cyclical low of 8.5 percent, both of which contributed to the improvement in the index.

The Summer 2023 report contains several insights on the economic landscape impacting small businesses, among them — rising delinquencies being a significant concern. The latest report emphasizes the need for strategic planning and careful management of debt, along with an understanding of broader economic factors that may impact small business performance.

Subscribe to this quarterly report here or follow our full suite of quarterly insights on our Commercial Insights Hub.

Are you a small business owner navigating the process of establishing your business credit profile?

Experian is here with a helpful guide about business credit and how it works to help you on your journey. From understanding how business credit scores and reports are originated, to employing best practices for building up a strong business credit report, the Experian Blueprint is here to assist you every step of the way.