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 near or below median — business credit loss cycle is benign. Banks are not under meaningful earnings pressure from business loan write-offs. Check DRBLACBS to see if delinquencies are starting to rise (which would give 1–2 quarters lead time).
Charge-Off Rate on Business Loans · Quarterly · 1985–2026
Grey areas = NBER recessions · Scroll to read · zoom and pan in Expand
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 the chart shows, from corblacbs. 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 most realized, lagging measure of business credit stress in the banking system.
In the DRBLACBS/CORBLACBS pair, charge-offs are the confirmation signal: they follow delinquencies by 1–2 quarters, representing the actualization of payment problems that the delinquency rate flagged earlier. While DRBLACBS warns that corporate borrowers are struggling, CORBLACBS confirms that those struggles have crystallized into permanent bank losses. When both are rising together, the bank credit channel is in active 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 each indicator based on historically significant thresholds:
< 0.3%
Very low — banks writing off almost no business loans; below p25 of history
0.3% – 0.6%
Near or below median — business credit loss cycle is benign
0.6% – 1.0%
Elevated — charge-offs rising above median; some bank earnings pressure beginning
1.0% – 1.6%
Significant — bank capital is being drawn down by business losses; credit tightening likely
> 1.6%
Severe — GFC-comparable realized losses; bank balance sheet stress; lending capacity impaired
Historical Extremes — What Happened Next?
When this indicator reaches extreme levels, history shows consistent patterns:
2010-04-01GFC Peak Charge-Off
1.85%
Following the GFC delinquency surge (DRBLACBS peaked ~6.75% in early 2010), charge-offs peaked around 2.57% in Q2 2010 — confirming the 1–2 quarter lag. Banks suffered enormous losses on business loans, requiring capital raises, TARP injections, and over 400 bank failures during 2008-2012.
2022-10-01Post-COVID Trough
0.23%
The lowest charge-off rate in the modern series — government stimulus, forbearance, and zero-interest rates essentially eliminated business loan losses temporarily. This is the historical floor for this series.
2002-07-01Dot-Com Recession Peak
2.24%
Dot-com bust and September 11 drove elevated business charge-offs as overleveraged telecom and technology companies failed. Banks with concentrated exposure to the sector faced significant write-downs.
Investor Checklist — Current Reading
Based on the current Biz Loan Charge-Off reading of 0.58% (Positive):
✓Low business charge-offs supportive of bank earnings and credit availability
ℹMonitor DRBLACBS delinquencies — rising delinquencies will flow into charge-offs within 1–2 quarters
Frequently Asked Questions
Why does CORBLACBS lag DRBLACBS by 1–2 quarters?
The timeline from healthy loan to charge-off follows a sequence: a borrower misses a payment (30+ days past due = delinquency), the bank attempts collection and workout (30-90 days), if unsuccessful the loan becomes non-performing (90+ days), the bank makes a specific provision, and finally charges off the loan (90-180 days after initial delinquency). This multi-month administrative process creates the 1–2 quarter lag between DRBLACBS peaks and CORBLACBS peaks.
How do charge-offs impact bank earnings and lending capacity?
Charge-offs directly reduce bank earnings through provision expense (banks must set aside reserves before the charge-off is taken) and then reduce book equity when the charge-off is finalized. Higher equity losses mean less capital available to support new lending under regulatory capital requirements (Basel III). A sustained charge-off cycle therefore reduces the supply of bank credit available to businesses — tightening credit conditions even further as the economy deteriorates.
Why was CORBLACBS so low post-COVID?
Pandemic relief programs (PPP loans, CARES Act, Fed facilities, bank forbearance) essentially suspended normal credit loss mechanisms for 2-3 years. PPP loans were predominantly forgiven rather than charged off. Forbearance allowed delinquent borrowers to suspend payments without triggering bank delinquency or charge-off reporting in some cases. The resulting 0.12% trough is historically anomalous and does not represent 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 typically occur 1-3 years after the initial charge-off as collateral is liquidated or borrowers emerge from bankruptcy. The net rate can therefore partially recover even while the economy remains weak, as old GFC-era loans generate recoveries.