Lendio's Q3 2024 SMB Lending Index highlights a cautiously optimistic lending market, showing a modest rise in small business access to capital. Despite easing credit criteria, sentiment remains divided, with lenders expressing optimism about future growth, while small business owners report ongoing concerns about financing accessibility.

The SMB Lending Index score increased from 62 in Q1 2024 to 64 in Q3 2024, reflecting a gradual loosening of loan qualification requirements in response to the Federal Reserve's interest rate cuts. Based on the financial profiles of over 14,000 businesses that sought funding on Lendio's platform in a quarter, the index serves as a barometer on nationwide SMB lending trends.

Regionally, the South led with an index score of 68, up two points from Q1, followed by the Midwest with an unchanged score of 66. Access to capital improved for industries like agriculture, utilities and transportation, while legal services, eCommerce and entertainment saw tightening conditions.

Survey results from 25 lenders reveal enthusiasm about growth prospects following the Fed's rate reductions.

While most small and medium sized businesses report their access to capital meets or exceeds market averages, a gap remains between lender optimism and small business owners' perceptions. 23% of small business owners rated access to capital as "very poor," a category no lenders selected. Similarly, only 27% percent of SMBs felt that their access to capital exceeds market averages, compared to the 41% of lenders who viewed it positively.

"The lending landscape still presents challenges for small business owners, but we're seeing a greater appetite to take on capital and invest in growth projects now that rates are softening and inflation is slowing," said Brock Blake, CEO of Lendio. "Our lenders are reporting an increase in qualified borrowers seeking larger amounts, which points to a more optimistic mindset from seasoned business owners."

Read the full report here.