Small Business Health Index
Every quarter, 1West analyzes the financial profiles of small businesses seeking capital through our marketplace. The result is a composite score — built from real application data, not surveys or estimates — that reflects the true health of Main Street. In Q1 2026, the businesses seeking financing were the most qualified cohort we’ve ever observed. But the data surfaces something more complicated: a widening gap between demonstrated strength and actual access to capital. We call it the Confidence Gap.
time in business, and credit readiness.
| Quarter | Applications | Avg Annual Revenue | Avg Credit Score | Avg Time in Business | Credit Readiness |
|---|---|---|---|---|---|
| Q1 2025 | 32,922 | $786K | 592 | 7.51 yrs | 61.9% |
| Q2 2025 | 29,275 | $742K | 590 | 7.20 yrs | 60.6% |
| Q3 2025 | 39,130 | $795K | 590 | 8.38 yrs | 67.1% |
| Q4 2025 | 34,480 | $773K | 591 | 7.51 yrs | 63.0% |
| Q1 2026 Latest | 46,001 | $926K | 602 | 8.33 yrs | 69.7% |
“Record volume. Record quality. Widening gap.”
Application volume and applicant quality both reached new highs in the same quarter — a combination that, under normal conditions, would signal a strong funding environment. The Confidence Gap tells a different story.
These were not marginal applicants. They were mature operators with nearly a decade of experience, revenues approaching $1 million, and credit profiles strong enough to score 68.9 on the inaugural SBHI.
The gap, then, is not about borrower quality. It is about the distance between demonstrated readiness and actual access to capital.
What the SBHI can say with confidence is this: the businesses are ready. The gap is worth closing.
Macroeconomic Caution
Broader uncertainty may be driving conservative posture across the lending ecosystem, independent of individual borrower quality.
Tightening Institutional Standards
Lending criteria across the industry have tightened — not just in marketplace lending — creating friction even for qualified applicants.
Shifting Borrower Expectations
Businesses may be navigating more conservative expectations about what they can qualify for, even when the numbers suggest otherwise.
About the Data
The SBHI draws exclusively from 1West’s internal application data — anonymized and aggregated — and is intended to provide a consistent, comparable benchmark across quarters. Data for Q1 2026 reflects applications received January 1 through March 23, 2026. All figures are averages across the full applicant pool. Individual outcomes vary.
Score Construction
Each component is normalized to a 0–10 value against fixed absolute ranges, then weighted and summed to produce the final SBHI score. The score was introduced in Q1 2026; prior quarters are shown for trend context only.
Score Components & Weights
Revenue normalized against $0–$1M range. Credit Score against standard FICO range of 300–850. Time in Business against 0–20 years.
Is your business ready for financing?
The data shows small businesses are stronger than ever. Find out where you stand — and what funding options are available to you today.
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