The weather-related retreat in small business credit quality earlier this year is firmly in the review mirror, according to newly released quarterly statistics.
The Experian/Moody’s Analytics Small Business Credit Index, which tracks credit conditions at firms with fewer than 100 staffers, increased by 2.4 points to a level of 112.2 for the second quarter of 2014. Outstanding credit balances saw a 4.8% quarterly uptick, and delinquency rates fell to 9.3 % (previously 9.7%), said Experian/Moody’s analysts. The picture going forward also tends to be brighter than would have been thought even weeks ago, as tensions in the Middle East and Eastern Europe began to mount.
“Risk to the outlook have shifted to events overseas and have become less threatening,” the index’s executive summary noted. “The positives outweigh the negatives, and the blossoming economic recovery will benefit small business’ finances and, hence, credit quality in the second half of 2014 and beyond.”
Among the biggest positive movers in credit quality by industry from the first quarter of the year to the second were construction and transportation. The latter of which may still dubiously boast one of the highest industry delinquency rates, but its quarterly improvement was considered notable and promising by Experian/Moody’s.
Worth watching, however, is the sometimes massive difference in credit quality between various US regions, as some areas are showing major struggles.
- Brian Shappell, CBA, CICP, NACM staff writer