Small Business Health Index
Every quarter, 1West analyzes the financial profiles of small businesses seeking capital through our marketplace. In Q2 2026, the Small Business Health Index held at 69.1 out of 100, statistically even with the record 68.9 we posted in Q1. The strongest applicant cohort we have ever measured was not a one quarter spike. It is the new baseline. What has not moved with it is access to capital. The Confidence Gap we named last quarter is still open.
Based on 46,412 applications · 1West Marketplace Data
A composite of revenue, creditworthiness, time in business, and credit readiness.
Applicant Health Overview
Q1 2026 produced the strongest cohort of applicants in 1West history. The question for Q2 was whether that strength would hold or fall back. It held. Across all four components, the Q2 profile sits within a hair of Q1, keeping the index at record territory for a second straight quarter.
Quarterly Trend
| 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 | 46,001 | $926K | 602 | 8.33 yrs | 69.7% |
| Q2 2026 Latest | 46,412 | $948K | 601 | 8.33 yrs | 68.9% |
Funding Activity
Demand did not cool. Q2 applications reached 46,412, holding the near record pace set in Q1 and well above the same quarter a year ago. Two quarters running, more small businesses are actively seeking capital, and they are arriving more qualified than any prior cohort.
Under normal conditions, two straight quarters of record volume and record quality would signal a strong funding environment. The data tells a more complicated story, and it is the same one we told in Q1.
The New Baseline
One strong quarter is a data point. Two is a pattern. The Q2 index confirms that the strength we saw in Q1 was not a fluke of a single reporting period. It is where the market now sits.
These were mature operators with more than eight years of experience, revenue approaching $1M, and credit profiles strong enough to keep the index at 69.1 for a second straight quarter. The applicant side of the equation is not the problem. It has quietly become the strongest part of the story.
Which is why the other half of the picture matters more, not less. The Confidence Gap we introduced in Q1, the distance between demonstrated readiness and actual access to capital, did not close in Q2. Applicant strength found a new, higher floor. Access did not rise to meet it. When quality plateaus at a record high and the gap stays open, the gap stops looking like a moment and starts looking like a market condition.
What the SBHI can say with confidence is this. The businesses are ready, and they have been ready for two quarters now. The gap is still worth closing.
Why the gap persists
Macroeconomic Caution
Broader uncertainty continues to drive a conservative posture across the lending ecosystem, independent of individual borrower quality.
Tightening Institutional Standards
Lending criteria across the industry remain tight, creating friction even for applicants who clearly qualify on the numbers.
Shifting Borrower Expectations
Many owners are recalibrating what they expect to qualify for, even when their profiles say they should qualify for more.
Methodology
The 1West Small Business Health Index is a quarterly composite score measuring the financial health and financing readiness of small businesses seeking capital through 1West’s marketplace.
About the Data
The SBHI draws exclusively from 1West’s internal application data, anonymized and aggregated, to provide a consistent, comparable benchmark across quarters. Data for Q2 2026 reflects applications received April 1 through June 30, 2026. All figures are averages across the applicant pool, with clearly invalid outlier records removed before averaging. Individual outcomes vary.
Score Construction
Each component is normalized to a 0 to 10 value against fixed absolute ranges, then weighted and summed to produce the final SBHI score on a 0 to 100 scale. The methodology is locked to the ranges established at launch in Q1 2026 so that quarters remain directly comparable.
Revenue normalized against a $0 to $1M range. Credit Score against the standard FICO range of 300 to 850. Time in Business against 0 to 20 years. Credit Readiness against 0 to 100%.
Is your business ready for financing?
The data shows small businesses are stronger than ever, for the second quarter running. Find out where you stand, and what funding options are available to you today.
Check Your Options →