Biz2Credit reported that debt repayment volume increased 24% and debt coverage improved from 0.57x in Q1 2025 to 1.40x in Q1 2026, indicating stronger SMEs can manage monthly obligations.
Consumer spending, a key driver for small business growth, remains robust. It rose sharply last month, outpacing inflation.
Delinquency rates and bank charge-offs on credit cards have been falling quarterly since 2024.
A major credit scoring agency noted that consumer credit was on "solid footing" in May, with consumers adapting to higher rates despite rising expenses and student loan payments.
Challenges persist. With 34 million small businesses and over 360 million people, some will struggle.
JPMorgan Chase CEO Jamie Dimon warned that the next credit cycle could hit harder than expected, pointing to $5.1 trillion in leveraged finance as a stress point.
A significant rate increase could trigger that, but the average plumbing company borrowing $500,000 for equipment won't be swayed by a quarter-point hike—they'll decide based on demand.
Small business bankruptcy filings jumped 67% this past quarter, according to the American Bankruptcy Institute, citing inflation, elevated rates, and geopolitical instability.
Some lenders are becoming cautious. However, CEOs of Bank of America and Wells Fargo are not raising alarms.
Bank of America reported "healthy client activity, including solid consumer spending and stable asset quality."
Wells Fargo noted "continued resiliency in the underlying economy" and strong financial health among consumers and businesses.
So, will the Fed raise rates? Possibly.
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But for established small businesses, a modest increase is unlikely to change major investment or hiring decisions.
