Credit utilization rates have expanded briskly in the first quarter to reveal a strong small business market with favorable credit conditions
ORLANDO, Fla., May 10, 2017 /PRNewswire/ -- Small business conditions were on the upswing at the start of 2017, per the Experian/Moody's Analytics Main Street Report. The detailed analysis, which will be presented at Experian's Vision Conference today, shows that businesses are reporting healthy sales, and are investing and hiring strongly. Their finances are also improving, as fewer businesses are having difficulty paying their bills on time.
Small businesses, in the first quarter of 2017, demonstrated a decline in early delinquencies (less than 30 days past due) and severe delinquencies (more than 90 days past due). Businesses also showed high single-digit gains in credit balances (up 8.8 percent) driven by strong credit utilization rates, while credit limits increased by 4.5 percent.
The strong performance by the small-business market can be attributed, in part, to an increase in consumer confidence. Due to a near-full employment rate and increased incomes, consumers are generating an increased demand for goods and services provided by small companies. This has caused the utilization of credit among small businesses to increase.
"The market performance data and insights on trends help our small businesses and lenders make more informed decisions," said Gavin Harding, senior business consultant for Experian. "So while we see that delinquencies are declining and credit limits and utilization rates among small-businesses owners are increasing, we also understand that small businesses don't have adequate credit to expand at their desired pace. If economic conditions continue to improve this year, we should see financial institutions start to increase credit availability for small-business owners."
While credit performance for small businesses across most industry groups showed improvement in the first quarter, the agriculture industry has remained surprisingly resilient despite four years of declining income for farmers. Performance in the manufacturing, transportation and public administration industries, however, was not as strong. Additionally, while the retail industry has seen improvements over the last two years, the segment continues to have the highest severe delinquency rates.
"Small businesses are very upbeat, as they should be given their improving financial condition," said Mark Zandi, chief economist for Moody's Analytics. "They are borrowing more and paying their obligations back on time. If small businesses continue to do well, so too will the broader economy."
Other sections in the Q1 2017 report include a detailed analysis of:
- Small-business risk assessment strategies.
- States ranked by their rate of severe delinquency.
- Potential impacts from policy changes.
- Credit quality in different industries.
- A forecasted outlook for the coming months.
The full results of the report, as well as additional data and insights on small-business health, will be presented in a webinar on June 13 at 10 a.m. Pacific/1 p.m. Eastern. To register for the event or for more information, visit http://www.experian.com/business-information/landing/qbcr-q1-2017.html.
About the Experian/Moody's Analytics Main Street Report
The Experian/Moody's Analytics Main Street Report brings deep insight into the overall financial state of the small-business landscape, providing commentary around what the impact of highlighted trends mean for credit grantors and the small-business community. The Main Street Report incorporates a business credit data (credit balances, delinquency rates, utilization rates, etc.) and macroeconomic information (employment rates, income, retail sales, investments, etc.).
About Moody's Analytics
Moody's Analytics helps capital markets and risk management professionals worldwide respond to an evolving marketplace with confidence. The company offers unique tools and best practices for measuring and managing risk through expertise and experience in credit analysis, economic research and financial risk management. By providing leading-edge software, advisory services and research, including the proprietary analysis of Moody's Investors Service, Moody's Analytics integrates and customizes its offerings to address specific business challenges. Moody's Analytics is a subsidiary of Moody's Corporation (NYSE: MCO), which reported revenue of $3.6 billion in 2016, employs approximately 10,600 people worldwide and maintains a presence in 36 countries. Further information is available at www.moodysanalytics.com.
About Experian
Experian is the world's leading global information services company. During life's big moments — from buying a home or a car, to sending a child to college, to growing a business by connecting with new customers — we empower consumers and our clients to manage their data with confidence. We help individuals to take financial control and access financial services, businesses to make smarter decisions and thrive, lenders to lend more responsibly, and organizations to prevent identity fraud and crime.
We have 17,000 people operating across 37 countries and every day we're investing in new technologies, talented people and innovation to help all our clients maximize every opportunity. We are listed on the London Stock Exchange (EXPN) and are a constituent of the FTSE 100 Index. Learn more at www.experianplc.com or visit our global content hub at our global news blog for the latest news and insights from the company.
Experian and the Experian marks used herein are trademarks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the property of their respective owners.
Contacts:
Nicole Risdall Rodriguez
Experian Public Relations
1 714 830 5233
[email protected]
Isabelle Cornelis
Moody's Analytics Communications
1 44 207 772 5207
[email protected]
ProfNet Expert Available:
Gavin Harding
http://www.profnetconnect.com/gavinharding
SOURCE Experian
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