Business Loan Default Rate Calculator: Defaults Over Portfolio
Work out a business loan portfolio's default rate — the share of loans not performing, and the headline risk metric every commercial lender watches.
Adjust the inputs and select Calculate for a full breakdown.
Compare Common Scenarios
How the numbers shift across typical situations for this calculator:
| Scenario | Default rate | Performing share |
|---|---|---|
| 15 of 500 (3%) | 3.00% | 97.00% |
| 8 of 200 (4%) | 4.00% | 96.00% |
| 120 of 3,000 (alternative lender) | 4.00% | 96.00% |
| 2 of 100 (clean portfolio) | 2.00% | 98.00% |
How This Calculator Works
Enter loans in default and total active loans in the portfolio. The calculator divides one by the other and multiplies by 100 to give default rate, with the performing share shown alongside. Use either count of loans or dollar value — both are valid but lead to different numbers.
The Formula
Part as a Percentage of a Whole
Part is the portion, Whole is the total it belongs to
Worked Example
A portfolio of 500 loans with 15 in default runs at 3% default rate, with 97% performing. SBA 7(a) historical default rates have averaged 5% to 8% across cycles; bank commercial loan portfolios typically run 1% to 3% in normal conditions, spiking to 4% to 8% in recessions. Alternative-finance and online business lenders often see double-digit default rates.
Key Insight
Default rate is a lagging indicator — defaults you see today reflect lending decisions made 12 to 36 months ago. The leading indicators are early-stage delinquency (30 days past due), debt service coverage trends in the portfolio, and concentration in industries facing stress. Lenders that wait for default rate to rise have already taken the loss; those tracking leading indicators can adjust origination criteria before defaults flow through.
Frequently Asked Questions
How is business loan default rate calculated?
Divide defaulted loans by total loans, multiply by 100. 15 defaults out of 500 loans is a 3% default rate.
What counts as default?
Definitions vary by lender. Common: 90+ days past due is default (some use 120 days). Charge-off is later still (typically 180 days). Use whichever your lender or risk department defines as default — the trend is what matters most.
What is a typical default rate?
SBA 7(a) historical: 5% to 8% lifetime default rate. Bank commercial loans: 1% to 3% in normal conditions, spiking to 4% to 8% in recessions. Alternative online lenders often 10%+ because of weaker underwriting standards.
Should I use count or dollar value?
Both are valid for different purposes. Count of loans shows the share of borrowers in trouble. Dollar value shows the share of capital at risk. Concentrated portfolios (few large loans) can have low count default rate but high dollar default rate.
How does default rate compare to charge-off rate?
Charge-off is the accounting writeoff after default — typically 180 days past due or after determining the loan won't be recovered. Default rate is higher than charge-off rate because some defaults eventually cure (catch up on payments) or recover through workout.
Related Calculators
Methodology & Review
The default rate is defaulted loans divided by total loans (by count or by dollar value) in the portfolio, multiplied by 100. The complement is the performing share. Definitions of 'default' vary — 30, 60, 90, or 120 days past due — and should be consistent across periods.
Written by Ugo Candido · Last updated May 17, 2026.