Small Businesses End 2018 with Positive Credit Conditions
Thursday, February 22, 2018
The small-business credit outlook is looking up, according to new data from Experian and Moody’s Analytics. Outstanding balances and the average balance outstanding increased in the fourth quarter of 2017. Delinquency and default rates also grew, indicating looser credit conditions.
The latest Experian/Moody's Analytics Main Street Report cites several factors contributing to the fourth quarter’s positive conditions:
- Delinquencies rose across three of the four stages tracked in the fourth quarter.
- Bankruptcies continued to rise in the fourth quarter, making 2017 a full year in which bankruptcies increased every quarter. Coming off historical lows, rising bankruptcies are a sign that activity is picking up.
- In the fourth quarter, balances rose 11.7 percent year-over-year.
- Utilization rates were down as businesses that entered or returned to the credit markets used less of their available credit than businesses that had accessed credit previously.
“Last year ended well, as the credit spigot for small businesses seems to have shifted from a mere trickle to a steady stream,” the report said. “It was also a bumper year for small-business credit, and 2018 looks set to rival it. A more favorable tax code and a strong macroeconomy will enable small firms to enter the new year with confidence levels high and a desire to invest and grow. Our outlook going into 2018 is upbeat, as small businesses are well-positioned to step back into credit markets in a way they haven’t done for years.”
View the full report.