America’s small business landscape is under pressure from higher interest rates and tighter credit—but not all states are feeling it the same way. A new report from The Kaplan Group ranks all 50 states on small business health using a blend of credit fundamentals and early stress signals, revealing where small firms look most resilient and where warning lights are flashing brightest.
This study tracks how small businesses are performing in credit data and how worried owners appear to be, based on what they search for online. The result is a practical state-by-state “health check”.
Key Takeaways
- South Dakota ranks #1 for small business health, with strong credit fundamentals and relatively low stress.
- Alabama ranks last (50th), with weak credit indicators and some of the strongest stress-related search intensity.
- Florida, Georgia, Louisiana, and Mississippi all land in the bottom 10, despite being large or growing business markets, signaling that stress is elevated beneath the surface growth story.
How the Small Business Health Score Works
This study builds a Small Business Health Score on a 0–100 scale for each state, then ranks states from 1 (healthiest) to 50 (most stressed). The score blends three types of signals:
- Experian SMB Index – a baseline view of small business conditions at the state level.
- Equifax/PayNet-style credit metrics – lending activity, delinquencies, defaults, and a probability-of-default outlook.
- Google Trends – searches related to “small business problems,” “small business risk,” and “business debt relief”.
Together, these indicators capture both what is happening in the credit data and how anxious small business owners appear to be.
States with the Healthiest Small Businesses
Top 10 States by Small Business Health Score
The top of the ranking is dominated by Northern and Upper Midwest states with strong credit performance and relatively calm stress.
- South Dakota (#1) – Highest overall score, reflecting robust lending conditions and some of the cleanest delinquency and default metrics.
- Montana (#2) – Strong fundamentals and a solid stress profile, with room for entrepreneurs to grow into a supportive credit environment.
- Wisconsin (#3) – High Experian readings and good repayment performance combined with moderate stress searches.
- Maine (#4) and Alaska (#5) – Smaller states with relatively favorable credit metrics and limited distress-topic search intensity.
Other states in the top 10 include Vermont, Minnesota, Iowa, New Hampshire, and Ohio, all of which pair above-average fundamentals with manageable stress
Bottom 10 States by Small Business Health Score
At the other end of the spectrum, a cluster of states shows weaker credit performance, elevated stress, or both.
- Alabama (#50) – The lowest composite score in the country, reflecting softer Experian conditions and a very weak stress score driven by elevated search intensity.
- Florida (#49) – Despite leading the nation in monthly new business formations, Florida ranks near the bottom on health, highlighting a “high-churn, high-stress” environment.
- Georgia (#48) – Similar story to Florida: strong formation volumes, but the health index flags elevated credit risk and higher stress searches.
- Louisiana (#47) and Mississippi (#46) – Low fundamentals and weak stress scores combine to signal entrenched pressure on small firms.
Other low-ranking states include Oklahoma, South Carolina, Texas, Nevada, and New Mexico, many of which are large, dynamic markets that still warrant a closer look at risk controls.
Fundamentals vs. Stress
Not every weak score means the same thing. Some states look soft because credit fundamentals have already deteriorated, while others look risky because stress signals are elevated before defaults spike.
Plotting each state’s Fundamentals score against its Stress score creates four useful quadrants:
- Strong fundamentals, low stress – Healthiest profile; typical of top-tier states like South Dakota and Wisconsin.
- Strong fundamentals, high stress – Credit looks okay for now, but business owners are worried; potential early-warning markets.
- Weak fundamentals, low stress – Past damage may already be in the data, even if concern is muted; watch for delayed stress.
- Weak fundamentals, high stress – The most concerning quadrant, where both outcomes and anxiety are elevated.
Top 10 States by Fundamentals
This isolates the “hard” credit and performance backbone of the index. Higher means stronger fundamentals.
- North Dakota — Fundamentals 100.0
- South Dakota — 95.6
- Wisconsin — 89.9
- Iowa — 85.6
- Montana — 83.1
- Ohio — 81.8
- Nebraska — 80.5
- Minnesota — 77.5
- Indiana — 75.0
- Maine — 74.0
Top 10 States by Stress Score
This isolates the search stress component only. Higher means less stress showing up in search behavior.
Low stress states
- Vermont — Stress score 100.0
- Alaska — 99.7
- Maine — 99.7
- New Hampshire — 99.7
- Hawaii — 90.6
- Massachusetts — 90.6
- Rhode Island — 90.6
- Connecticut — 90.6
- North Carolina — 90.6
- Virginia — 90.6
High stress states
- Alabama — Stress score 0.0
- North Dakota — 35.4
- Florida — 47.7
- Indiana — 47.7
- Louisiana — 47.7
- North Carolina — 47.7
- Virginia — 47.7
- Arkansas — 58.4
- California — 58.4
- Colorado — 58.4
How to Use This Index
This Small Business Health Score is best used as a comparative benchmarking tool, not a prediction of any one firm’s default probability. The index also complements prior Kaplan Group research on new business formations and business bankruptcies, adding a credit and behavioral stress dimension to the picture of where businesses are starting, surviving, and under strain.
Data By State
Methodology
Data Sources
- Experian SMB Index: Summary state-level indicator of small business health
- Equifax/PayNet-style credit indicators:
- Lending Index (credit availability / activity)
- Small Business Delinquency Index (repayment stress)
- Default Index (realized deterioration)
- AbsolutePD Outlook (forward-looking risk proxy)
- Google Trends (by state):
- “small business problems”
- “small business risk”
- “business debt relief”
Fundamentals, stress, and the final score
Because the inputs are in different units (indexes, rates, normalized search scores), each variable is standardized across states with z-scores so that no single metric dominates based on its scale. Variables where “high is bad” are flipped so that higher values always mean better health:
- Flipped (bad when high): delinquency, default, PD outlook, and stress-related search terms
- Kept as-is (good when high): Experian SMB Index, Lending Index
Two sub-scores are constructed:
- Fundamentals score: Experian + Lending + (reversed) delinquency, default, and PD outlook
- Stress score: (reversed) Google Trends terms, so higher scores reflect less stress
The final Small Business Health Score is a weighted blend:
Small Business Health Score=0.60×Fundamentals+0.40×Stress\text{Small Business Health Score} = 0.60 \times \text{Fundamentals} + 0.40 \times \text{Stress}Small Business Health Score=0.60×Fundamentals+0.40×Stress.
Scores are then rescaled to 0–100 and states are ranked from healthiest to most stressed.
Limitations
As with any composite index, there are important caveats:
- Data sources may not align perfectly in time; this analysis treats them as comparable recent snapshots.
- Google Trends measures attention and concern, which can be influenced by media coverage as well as real financial stress.
- Rankings are relative, not absolute: a low score means “weaker than peers,” not “doomed.”
- State-level results do not adjust for industry mix, firm size, or business model, all of which can shape risk in ways that are not easily changed in the short term.
