Small Business Credit Conditions Show Pockets of Deterioration

Overall, Experian and Moody’s Analytics Main Street Report for second-quarter 2016 presents a positive outlook for small business credit, provided interest rates don’t increase or economic growth doesn’t decrease. For segments of the United States, however, the news was not as bright.

The quarterly report looks at the financial well-being of small businesses and includes business credit data such as credit balances, delinquency rates and utilization rates as well as macroeconomic information such as employment rates, income retail sales and investments.

“States in the Upper Plains and Mid-Atlantic regions experienced some of the largest increases in small business bankruptcy rates in the country,” while most states—with the exception of Nevada and Oklahoma—in the Southeast and Southwest saw a decline, the report says. Oklahoma’s outlook remains negative because of “the decline in oil prices, which last quarter had a major impact on delinquency rates in the transportation and utility industries,” it notes.

The District of Columbia experienced a broad-based decline in bankruptcy rates across construction, finance and services sectors and showed the most improvement nationwide with a drop of 6 basis points. “DC’s bankruptcy rate is below the national average and likely to remain there as the business climate in the District improves and the federal government’s presence remains a steadying force for businesses,” the report states.

On the other side of the coin, “West Virginia has the distinction of having the highest bankruptcy rate of any other state,” it adds. Bankruptcies in the state rose more quickly than any other state with an increase of 3 basis points. The report credits the increase to its “large exposure to the mining and transportation industries, which have been hammered as the price of coal has declined.”

- Diana Mota, associate editor

For additional coverage of the Experian and Moody’s Analytics Main Street Report, check out this week’s eNews.

No comments:

Post a Comment