Business credit conditions slowly improving
Improvement seen in 3 straight quarters
Credit conditions for small businesses showed slight improvement quarter-over-quarter, Experian said in a recent report.
According to the latest Experian/Moody’s Analytics Small Business Credit Index, small-business credit conditions improved from the first quarter (Q1) of 2012 to the second quarter (Q2) of 2012. This marks the third straight quarter of improvement.
The Experian/Moody’s Analytics Small Business Credit Index rose from from 103.2 in Q1 to 104.1 in Q2.
“Small businesses continue to get their financial houses in order, but the progress is slow and they remain cautious in expanding their operations,” Mark Zandi, chief economist at Moody’s Analytics, said in a statement.
Despite the positive recent results in business credit conditions, credit quality should be slow to improve in coming months, Experian said, and small-business hiring could be slowed due to issues with dampened business confidence
“Until small businesses step-up more aggressively, the economy will struggle to grow,” Zandi said.
Findings from Q2 results included the following:
- Small business credit quality improved slightly while hiring slowed.
- The financial strength of small businesses continues to vary widely across the country.
- Small businesses exhibited slower repayment behavior from Q1 to Q2.
“Paying bills on time is just as critical for a business as it is for a consumer,” Allen Anderson, president of Experian’s Business Information Services, said in a statement. “Delinquent payments have a direct negative impact on risk scores, making it difficult to qualify for the best rates and terms.”
Anderson continued: “Having this access to additional credit when needed, can be a business’ life line in times of economic distress.”
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