Data through: Q2 2026 · updated Aug 26 · Updates: Quarterly
Historical context: Currently in the 55th percentile of all historical readings.
What this means right now: Charge-offs are low — the business credit loss cycle is benign and banks are under little earnings pressure from business loan write-offs. The delinquency rate (DRBLACBS) moves with this series rather than ahead of it: at the peaks on record the two have come within a quarter of each other, in either order.
Charge-Off Rate on Business Loans · Quarterly · 1985–2026
NBER recessions
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Monthly values
Charge-Off Rate on Business Loans — the last 8 quarters
Every quarter's reading, with the band the heatmap gives it. The chart above shows the same series in full.
Quarter
Value
Band
Q2 2026
0.58%
Healthy reading
Q1 2026
0.59%
Healthy reading
Q4 2025
0.56%
Healthy reading
Q3 2025
0.57%
Healthy reading
Q2 2025
0.58%
Healthy reading
Q1 2025
0.55%
Healthy reading
Quarter-end readings of the same series as the chart. Values are the current record, not point-in-time: a month that has since been revised shows its revised value.
What is the Biz Loan Charge-Off?
The Charge-Off Rate on Business Loans (FRED: CORBLACBS) measures the annualized rate at which commercial banks write off business loans as uncollectible, expressed as a percentage of average outstanding balances. A charge-off occurs when the bank formally removes a loan from its books after exhausting collection efforts — typically after 90-180 days of non-payment. This makes CORBLACBS the last stage of business credit stress in the banking system: losses written off, not just payments missed.
Charge-offs and delinquencies (DRBLACBS) move together. At the peaks they have come within a quarter of each other: charge-offs peaked one quarter after delinquencies in 1991 and 2002, in the same quarter in 2009, and one quarter before them in 2020. While delinquencies show borrowers struggling, charge-offs show those struggles turned into permanent bank losses. When both are rising together, the bank credit channel is under stress.
The charge-off rate is analytically important because it is the closest measure to actual realized bank losses from corporate borrowers. Unlike delinquencies (which can be cured) or market-priced spreads (which can overshoot), charge-offs represent final, acknowledged losses. They directly impact bank earnings, capital ratios, and lending capacity — a sustained charge-off cycle reduces the supply of bank credit available to the economy.
How We Color-Code the Biz Loan Charge-Off
Our heatmap colors this indicator against historically significant thresholds:
Below 0.30%
Very low — banks writing off almost no business loans, as in about 1 quarter in 4 since 1985 (22%)
0.30% – 0.60%
Low — the business credit loss cycle is benign; the most common band, about 1 quarter in 3 since 1985 (35%)
0.60% – 1.00%
Elevated — bank earnings starting to feel business loan losses, about 1 quarter in 8 since 1985 (13%)
1.00% – 1.60%
Significant — bank capital being drawn down by business losses, about 1 quarter in 5 since 1985 (20%)
1.60% or above
Severe — 16 quarters since 1985, in 1991–92, 2001–03 and 2009–10; bank balance sheets under stress
Historical Extremes — What Happened Next?
When this indicator reaches extreme levels, history shows consistent patterns:
Q3 2009GFC Peak Charge-Off
2.57%
The record high. Charge-offs peaked in the same quarter as delinquencies, which reached 4.39%.
Q4 2021Post-COVID Trough
0.12%
The series' low, also reached in Q2 1995 and Q1 2022. Relief programmes and near-zero rates held business loan losses down for a time.
Q3 2002Dot-Com Recession Peak
2.24%
The high of the cycle after the dot-com bust, one quarter after delinquencies peaked. It came three quarters after the 2001 recession ended.
Frequently Asked Questions
How far does CORBLACBS lag DRBLACBS?
The path from healthy loan to charge-off runs in steps. A borrower misses a payment, and the loan is delinquent once it is 30 days past due. The bank tries collection and workout; if that fails, the loan becomes non-performing at 90 days. The bank then sets aside a provision and finally charges the loan off, typically 90 to 180 days after the first missed payment. On the record, though, the peaks have come within a quarter of each other: charge-offs peaked one quarter after delinquencies in 1991 and 2002, in the same quarter in 2009, and one quarter before them in 2020.
How do charge-offs impact bank earnings and lending capacity?
Charge-offs reach bank earnings through provisions: a bank sets aside reserves as losses become likely, and the charge-off is then written against those reserves. Provisions cut earnings, and so capital. Less capital leaves less room to lend under regulatory capital rules (Basel III). A long period of charge-offs therefore tends to cut the supply of bank credit to businesses just as the economy weakens.
Why was CORBLACBS so low post-COVID?
Pandemic relief programs (PPP loans, the CARES Act, Fed facilities and bank forbearance) held normal credit losses down for two to three years. PPP loans were mostly forgiven rather than charged off, and forbearance let some delinquent borrowers suspend payments without a delinquency or charge-off being reported. The 0.12% readings of late 2021 and early 2022 sit at the series' floor. The same level was reached once before, in Q2 1995, in an ordinary expansion. Coming after the relief programmes of 2020–21, they do not describe steady-state credit quality.
What is the difference between the net charge-off rate and gross charge-off rate?
CORBLACBS is the net charge-off rate — gross charge-offs minus recoveries (amounts collected on previously charged-off loans), divided by average loan balances. Recoveries can come long after the charge-off, as collateral is sold or borrowers come out of bankruptcy. So the net rate can fall while the economy is still weak. After its peak in Q3 2009 it fell by more than half within six quarters, while unemployment stayed at 9% or more. The site holds no split of gross charge-offs and recoveries, so it cannot show how much of that fall came from recoveries.
How are this page's colour levels set?
Below 0.30% banks are writing off almost no business loans. From 0.30% to 0.60% the loss cycle is benign and banks are under little earnings pressure from write-offs. From 0.60% to 1.00% charge-offs are elevated and bank earnings start to feel the losses. From 1.00% to 1.60% the losses are significant and draw down bank capital. At 1.60% or above they are severe and bank balance sheets are under stress, as in 1991–92, 2001–03 and 2009–10. They are fixed levels, set in June 2026 with the series' whole history in view, and they do not move as new data arrives. A rate of 1.60% gets the same colour in 1991 as today, so a change of colour is a change in charge-offs, never in the yardstick.