Bill Phelan,
SVP & General Manager, U.S. Information Solutions Commercial Services,
Equifax

Ninety-nine percent of businesses across the U.S. are small businesses making it critical for those businesses to reliably access credit to help fuel continued growth, especially as financial stress and uncertainty remains a concern in today’s market.

Small businesses’ finances are the key to a growing economy.

By itself, the small business economy would be a standalone economy and bigger than most economies around the world. Small businesses employ 62 million Americans.

Thirty-eight million small and private companies in the United States represent $11 trillion of gross domestic product, which is quite a meaningful portion of our economic activity in the U.S. These businesses include people who work as dry cleaners, car washers, plumbers, carpenters and farmers, for example.

At the same time, in speaking with Bill Phelan, SVP and general manager of Equifax Commercial, “small businesses can be more susceptible to economic headwinds affecting the macro market environment. That’s what we are seeing today — the combination of high inflation, rising interest rates and market tightening is reflected in the finances of small businesses.”

What is going on in the economy?

Small business loans and lending are estimated to be $8.5 trillion, and the financial health of these small businesses remains strong despite holding back investments due to uncertainties in the economy. “We do see some spottiness depending on what industries and geographic region these businesses operate,” Barry Ripes, SVP, Commercial Financial Services, says. “For example, the agricultural sector is doing really well and we don’t see rising financial stress in that segment. At the same time, we don’t see it in construction, retail or general ‘Main Street American’ businesses, such as dry cleaners and car washes.”

Helping to improve financial inclusion and equipment leasing.

Equifax is investing during these uncertain economic times to raise financial inclusion for small and medium-sized businesses, making it easier to access the data and make more effective decisions. The Equifax technology allows us to deliver the highest hit rates for our customers by leveraging different databases that are specific to the industry and equipment leasing. In one case, for a major bank in the Midwest, we were able to deliver a 98% hit rate on the commercial businesses.

Equifax has broken it out by 12 major industry categories in the United States, including retail, manufacturing, real estate, agriculture and healthcare, among others. The validations for our clients have already shown results in predictive lift. This allows our clients the opportunity to approve up to 15% or 20% more applicants versus what they may see using other risk scores.