The PayNet Small Business Lending Index fell 14.4 points, or 11.8%, to 107.4 in April and is now 32% below its year-ago level, potentially suggesting that small businesses are substituting traditional lending with Paycheck Protection Program loans. The SBLI three-month moving average declined 9.8%, its largest-ever monthly decrease, and is down 16% over the last year.

In April, lending contracted in all 10 of the largest states, with New York (-4.4% M/M), Pennsylvania (-3.8% M/M), Ohio (-3.5% M/M), Florida (-3.3% M/M) and Illinois (-3% M/M) recording their largest-ever monthly declines. Compared with a year ago, lending is also down in all 10 of the largest states, with the sharpest contractions occurring in Illinois (-12% Y/Y), Pennsylvania (-8.2% Y/Y) and Florida (-8.1% Y/Y). Texas (-2.2% Y/Y) and Georgia (-2.5% Y/Y) — among the first states to begin reopening their economies — declined the least but were still heavily impacted.

Lending activity fell in every non-agricultural major industry in April, led by accommodations and food services (-5% M/M); transportation and warehousing (-4.6% M/M); arts, entertainment and recreation (-4.3% M/M); and mining and oil & gas (-4% M/M). Despite monthly declines, public administration (+11% Y/Y), construction (+3.5% Y/Y) and health care (+3.5% Y/Y) still exhibited year-over-year growth, while transportation and warehousing (-15% Y/Y), mining and oil and gas (-14% Y/Y), and information (-10% Y/Y) continued to deteriorate compared with year-ago levels.

The PayNet Small Business Delinquency Index (SBDI) 31–90 Days Past Due rose 36 basis points in April, more than doubling the previous largest monthly increase of 16 basis points set the previous month. The index is now 59 basis points above its year-ago level. Meanwhile, the SBDI 91–180 Days Past Due increased five basis points and has risen 11 basis points over the last year.

Delinquencies rose in all 10 of the largest states in April as six states, including New York (+40bp M/M), Florida (+43bp M/M) and Illinois (+35bp M/M) recorded their largest ever monthly increases. Likewise, delinquencies increased on a year-on-year basis across the board, led by Georgia (+90bp Y/Y) and Ohio (+58bp Y/Y; largest-ever annual increase). Defaults rose in the largest states with New York (+22bp M/M) and Texas (+24bp M/M) recording their largest ever monthly increases, although Illinois (+1bp M/M) saw only a minor uptick. Compared with a year-ago, defaults are up considerably in California (+114bp Y/Y), Texas (+91bp Y/Y) and Florida (+75bp Y/Y).

In April, outside of agriculture (+6bp M/M), every major industry recorded its largest-ever SBDI monthly increase led by retail (+60bp M/M) and health care (+43bp M/M). Compared with a year ago, delinquencies are up the most in transportation (+101bp Y/Y) and retail (+81bp Y/Y) with every major industry now in the top one-third of historical readings. Regarding defaults, the largest upticks occurred in the public sector (+35bp M/M; largest-ever monthly increase), accommodations (+20bp M/M) and information (+23bp M/M). Compared with a year ago, defaults have surged in transportation (+236bp Y/Y), finance (+91bp Y/Y) and retail (+82bp Y/Y).