Twelve-month default rates on 2026 originations are tracking 80 bps below the 2023 vintage at the same seasoning point, with the largest improvement in services and B2B.
Default behavior on small-business credit originated in the first half of 2026 has been materially better than the 2023 vintage at the same seasoning point. Across the portfolio we monitor, twelve-month early-default rates are running at roughly 4.6%, compared to 5.4% for the 2023 cohort.
The improvement is not evenly distributed. Services and B2B verticals are leading the recovery, with default rates inside historical norms. Restaurants, brick-and-mortar retail, and long-haul trucking continue to print elevated default behavior — though even those segments are stabilizing relative to mid-2024.
Stronger early-default performance is encouraging more aggressive box expansion among the funders we work with. We are seeing renewed appetite for slightly thinner files — for example, 10-month time-in-business minimums where the prior standard was 12.
Funders are not loosening on cash flow. Daily debit ratio thresholds, NSF tolerance, and stacking detection remain tight. The recovery is in time-in-business and credit tolerance, not in revenue quality.
Funders that adopted soft-pull pre-qualification in 2025 are reporting 2.3x higher application-to-funding conversion and materially lower CAC than peers still gating with hard pulls.
Falling SBA fees and faster PLP processing have changed the math. For tickets under $500K with weaker collateral, 7(a) is now structurally cheaper than conventional term once total cost of capital is measured.
Average buy rates across A-paper merchants tightened 9 bps month-over-month as risk-on capital rotated back into short-duration revenue-based product.
