B2B Credit Risk by State: The U.S. Commercial Credit Risk Index

The Most Dangerous States for Extending Business Credit in 2025

When your business extends credit—Net 30, Net 60, or even Net 90—you are effectively becoming a lender. And depending on where your customer is located, your chances of being paid late (or not paid at all) can rise dramatically.

Methodology: How We Determined Business Credit Risk

No single dataset perfectly measures B2B payment behavior, so Fair Capital uses a multi-layered model combining:

1. Business Bankruptcy Rates (Hard Economic Data)

Using 2024–2025 bankruptcy data and comparative state analysis, we examine:

• Bankruptcies per 100,000 businesses

• Year-over-year change in business failures

• State-level economic health and GDP trends

States with high or rapidly rising bankruptcy rates demonstrate greater risk of B2B non-payment.

2. Statute of Limitations on Written Contracts

The shorter the statute of limitations, the easier it is for a delinquent business to:

• Stall

• Delay disputes

• Run down the clock

States with 3–4 year statutes increase the risk that slow action results in lost claims.

3. Business Entity & Asset-Protection Laws

Some states are highly attractive for:

• Anonymous/low-transparency LLCs

• Strong charging-order protections

• Asset-shielding for owners

• Easy dissolution or redomestication

These features directly impact collectability, even if you win in court.

4. Debt-Collection Regulatory Environment

Commercial debts are not covered by FDCPA, but states still impose:

• Licensing requirements

• Communication restrictions

• Mandatory disclosures

• Penalties for non-compliance

The stricter the regulatory framework, the harder it is to pursue overdue B2B receivables efficiently.

Using these factors together, we created the Fair Capital Business Credit Risk Index, identifying the states where creditors face the highest combined risk of non-payment and post-default loss.

How the CCR Index™ Measures Credit Risk

To create an accurate 1–100 score for every state, we use a four-factor legal model:

1. Statute of Limitations (SoL) – 35% Weight

Shorter SoL = higher non-payment risk(less time to enforce unpaid invoices)

2. Asset Protection Strength – 35% Weight

Stronger owner protections → higher default and lower recovery odds

3. Anonymous LLC Status – 15% Weight

Anonymous entities = higher fraud and avoidance risk

4. Collection Environment Strictness – 15% Weight

Strict compliance laws reduce creditor leverage and increase write-offs

This model gives us a fair, accurate, defensible credit-risk score for each state without relying on questionable behavioral data.

State-by-State Commercial Credit Risk Index™ –

(CCR Score 1–100)

90–100 = Extreme Risk

75–89 = High Risk

60–74 = Elevated Risk

40–59 = Moderate Risk

0–39 = Lower Risk

Top 10 Highest-Risk States for Extending Business Credit

Rank	State	CCR Score
1	Delaware	92
2	Wyoming	90
3	Nevada	88
4	Texas	82
5	Florida	80
6	California	78
7	New Mexico	76
8	Colorado	74
9	Alaska	72
10	New York	70

These states combine short statutes of limitations, tough regulatory landscapes, and powerful asset-protection structures that make non-payment far more likely and collection far more difficult.

Lowest-Risk States

Rank	State	CCR Score
1	Iowa	42
2	Kentucky	40
3	Indiana	45
4	Missouri	45
5	Rhode Island	45
6	Vermont	45
7	West Virginia	45
8	Minnesota	48
9	Wisconsin	48
10	Montana	47

Fair Capital CCR Index™ Table (Full 50-State List)

State	SoL (Written Contracts)	Anonymous LLC?	Asset Protection Strength	Collection Strictness	CCR Score
Alabama	6 yrs	No	Moderate	Moderate	58
Alaska	3 yrs	No	Strong	Moderate	72
Arizona	6 yrs	No	Moderate	Moderate	55
Arkansas	5 yrs	No	Moderate	Moderate	57
California	4 yrs	No	Moderate	Strict	78
Colorado	3 yrs	No	Moderate	Strict	74
Connecticut	6 yrs	No	Moderate	Moderate	50
Delaware	3 yrs	Yes	Strong	Moderate	92
Florida	5 yrs	No	Strong	Moderate	80
Georgia	6 yrs	No	Moderate	Moderate	65
Hawaii	6 yrs	No	Moderate	Moderate	48
Idaho	5 yrs	No	Moderate	Moderate	55
Illinois	10 yrs	No	Moderate	Strict	60
Indiana	10 yrs	No	Moderate	Moderate	45
Iowa	10 yrs	No	Moderate	Moderate	42
Kansas	5 yrs	No	Moderate	Moderate	55
Kentucky	10–15 yrs	No	Moderate	Moderate	40
Louisiana	10 yrs	No	Moderate	Moderate	42
Maine	6 yrs	No	Moderate	Moderate	48
Maryland	3 yrs	No	Moderate	Strict	70
Massachusetts	6 yrs	No	Moderate	Strict	63
Michigan	6 yrs	No	Moderate	Moderate	55
Minnesota	6 yrs	No	Moderate	Moderate	48
Mississippi	3 yrs	No	Moderate	Moderate	68
Missouri	10 yrs	No	Moderate	Moderate	45
Montana	8 yrs	No	Moderate	Moderate	47
Nebraska	5 yrs	No	Moderate	Moderate	55
Nevada	6 yrs	Yes	Very Strong	Moderate	88
New Hampshire	3 yrs	No	Moderate	Moderate	66
New Jersey	6 yrs	No	Moderate	Strict	63
New Mexico	6 yrs	Yes	Strong	Moderate	76
New York	6 yrs	No	Moderate	Strict	70
North Carolina	3 yrs	No	Moderate	Moderate	66
North Dakota	6 yrs	No	Moderate	Moderate	49
Ohio	6 yrs	No	Moderate	Moderate	52
Oklahoma	5 yrs	No	Moderate	Moderate	55
Oregon	6 yrs	No	Moderate	Moderate	52
Pennsylvania	4 yrs	No	Moderate	Moderate	60
Rhode Island	10 yrs	No	Moderate	Moderate	45
South Carolina	3 yrs	No	Moderate	Moderate	66
South Dakota	6 yrs	No	Strong	Moderate	65
Tennessee	6 yrs	No	Moderate	Moderate	56
Texas	4 yrs	No	Strong	Moderate	82
Utah	6 yrs	No	Moderate	Moderate	48
Vermont	6 yrs	No	Moderate	Moderate	45
Virginia	5 yrs	No	Moderate	Moderate	55
Washington	6 yrs	No	Moderate	Strict	60
West Virginia	10 yrs	No	Moderate	Moderate	45
Wisconsin	6 yrs	No	Moderate	Moderate	48
Wyoming	10 yrs	Yes	Very Strong	Moderate