In this episode of Market Pulse, Katherine Doe of Equifax discusses the U.S. economic outlook for consumer and small business credit with David Fieldhouse, director of consumer credit analytics at Moody's Analytics. Evan Leaphart, founder and CEO of Kiddie Kredit and co-founder of Black Men Talk Tech, explains his mission of educating kids about credit so they are poised for entrepreneurial success later in life -- and can qualify for credit when they need it.

This portion of the transcription is edited for brevity. Listen to the full podcast for more great insights.

Katherine:

Sounds like these are potentially great conditions for entrepreneurs and those thinking about starting a small business. We've spoken on this podcast and in our Market Pulse webinars about the increases in cashless payments and a huge rise in e-commerce. But then there's also the funding capital and credit side to consider in starting a small business. So I'd be curious to hear what you are seeing in the data for small business credit performance and also availability?

David:

There is going to be quite a bit of demand for small business credit. There are many cases where businesses are being formed. If we look through business applications, we're seeing them coming in at a pretty high clip, on pace for 6 million new business applications in 2021. If we put that in perspective with 2018, 2019, that would typically be around 3.5. So there's new businesses. 

I think like all the work that Evan's doing, all the entrepreneurs out there, they are working to make the economy a more productive place. And I think the question then is what kind of financing is there out for these individuals? If we sort of start to look through the data, we saw that in 2020, private lending was a bit tight overall.

The signs are strong that credit is really coming back. 2020 was really about the PPP program and that's free credit. So, the private credit sort of stood on the sidelines, but the public credit really came in. Now that program is over. So the private lending needs to come back and it does seem to be coming back overall. 

Katherine:

I'm going back to one of the statistics that Dr. Rob Wescott shared on our June 4th webinar. He shared that a quarter of black-owned businesses report credit availability as their top business challenge due to COVID. And that represents more than double the percentage of Asian and white owned businesses. And I'm just curious Evan, with your network are you hearing that to be a problem? Are you hearing a similar message? And I guess moreover, what can we do to remedy this as an industry and as a community that wants to support all small businesses and entrepreneurs?

Evan:

A lot of people have great business ideas, but we need the capital to access them. Even to get to the point where you're considered worthy of getting a loan. Just the initial bootstrapping to incorporate your business and set up a bank account properly. And all of the little things which may seem so minute to certain demographics, for communities of color it's a little more challenging. We don't have as many resources around us to really get started. So when we talk about what we can do to be helpful, it really helps people to get through those initial steps. 

If we really want to be helpful to black founders, we need to help them from the very beginning and partner with them. Do things that uplift, so not just mentorship, but providing clients. Those things that bring actual dollars into the business start to help because now things are showing up on their balance sheets, and now it's easier to get a loan. Maybe it's easier to get an investor. 

For more on this interview, listen to our full podcast. To access the latest consumer credit and small business insights, contact your Equifax account executive today, or visit us online at equifax.com/business. You might also enjoy checking out Economy.com by Moody’s Analytics  for the latest economic updates.

******We want to hear from you! What did you think of this episode? What would you like to hear our experts share in the future? Email us: [email protected]. 

RESOURCES mentioned in this podcast:

• Kiddie Kredit is a mobile app designed to educate children on the credit system by completing chores. www.kiddiekredit.com
• Do you have the economic and consumer credit performance data you need?  With CreditForecast.com -- a joint product created by Equifax and Moody’s Analytics -- you can access data, forecasts, scenarios, analyses and more from analysts you trust. https://www.creditforecast.com
• Register for upcoming Market Pulse webinars from Equifax, plus access previous webinars and presentations.
• Download our latest Credit Trends reports.