Determine the total number of defaults on loans a company has over the course of a year. For example, a small lender had three people default on personal loans this year. Alternatively, a small company defaulted on one loan during the year.
Determine the number of loans outstanding during the year for the lender. In our example, the small lender had 100 loans outstanding during the year. In the alternate; the small company had 5 loans during the year.
Divide the number of defaults by the number of loans outstanding during the year. In our example, 3 divided by 100 equals a 3 percent default rate. In the alternative, 1 divided by 5 equals a default rate of 20 percent for the year for the small company.