Transparency
Our Methodology
The US Business Funding Climate Score is built on public data from the Federal Reserve and the US Department of Labor. This page explains every data source, every FRED series ID, and the exact formula used to calculate the 0–100 score. No black boxes.
The Scoring Formula
// Starting score
score = 100
// Deductions
score −= 5 × floor((dprime − 5.0) / 0.25) // if dprime > 5%
score −= 1 × drtscilm_pct // C&I tight, large
score −= 0.5 × drtscis_pct // C&I tight, small
score −= 3 // if t10y2y < 0 (inverted curve)
score −= (icsa − 250000) / 10000 // if icsa > 250K
// Bonuses
score += 5 // if busapp 4-week trend is rising
score += 3 // if t10y2y > 1.0
// Bounds
score = max(0, min(100, score))
80–100
Optimal
60–79
Moderate
40–59
Risky
0–39
Critical
The Six Indicators
Prime Rate
Baseline borrowing cost
The US prime rate directly sets the floor for most variable-rate small business loans, SBA 7(a) loans, and revolving lines of credit. When it rises, every loan tied to it costs more — immediately.
C&I Lending Standards — Large Firms
Bank tightening signal (large firms)
Percentage of banks reporting tighter commercial & industrial lending standards for large firms. When large-firm standards tighten, small-firm conditions almost always follow — lenders become more selective across all borrower sizes.
C&I Lending Standards — Small Firms
Bank tightening signal (small firms, direct)
Same survey, small-firm specific. This directly measures how much harder it has become for a small business to get a loan versus last quarter. A positive number means more banks are tightening than easing.
Treasury Yield Spread (10Y − 2Y)
Credit market health signal
The gap between the 10-year and 2-year Treasury yield. A negative spread (inverted curve) historically precedes recessions and credit crunches. When deeply inverted, banks compress lending margins and reduce risk appetite for small business loans.
Initial Jobless Claims
Labor market health
Weekly new unemployment claims. Rising claims signal a weakening labor market, which increases default risk on existing business loans and makes lenders more conservative about new credit. The 250,000 threshold reflects historically healthy labor conditions.
Business Applications
Entrepreneur confidence signal
New business applications filed in the US. A rising 4-week trend signals that entrepreneurs are confident enough to start new ventures — a leading indicator of healthy credit demand and economic expansion.
AI Transparency
The written analysis on each blog post is generated by a multi-agent AI pipeline (CrewAI framework, Groq inference). The agents receive the raw FRED indicator values and the calculated score, then produce human-readable explanations of the economic mechanisms at work.
The score itself is deterministic — calculated by the fixed Python formula above with no AI involvement. The AI only writes the explanatory text.
A Note on Data Lag
Some indicators (C&I Lending Standards) are released quarterly by the Federal Reserve — the score reflects the most recently published values, which may be 1–3 months old for these series. Daily-frequency indicators (Prime Rate, Yield Spread) and weekly indicators (Jobless Claims, Business Applications) are always current as of the prior trading day.