Growth in credit balances and the decline in delinquency rates push small-business credit conditions to new heights
COSTA MESA, Calif., Feb. 18, 2015 /PRNewswire/ -- Experian®, the leading global information services company, today announced new insights from its Experian/Moody's Analytics Small Business Credit Index that showed small businesses continue to have access to a wider availability of credit as credit conditions reached the highest level on record, improving for the third consecutive quarter. According to the most recent report, outstanding credit balances grew by 2.2 percent from a year ago, while delinquency rates declined to a cyclical low of 8.5 percent, both of which contributed to the improvement in the index.
To download a copy of the report, visit http://bit.ly/1vshZN4.
"Small businesses are finally kicking into high gear," said Mark Zandi, chief economist for Moody's Analytics. "They are investing and hiring more and are borrowing more to finance their expansion. They are also repaying what they have already borrowed in a more timely way. Business conditions are much improved and will likely improve even more in coming quarters."
Findings from the report also showed that small businesses have helped themselves, improving their risk and payment behavior across the board. Most notably, over the last year, small businesses have reduced the number of days they paid their bills beyond contacted terms by full a day, or more than 19 percent. Over the same time period, the average commercial risk score1 for a small business rose 3.1 percent to reach 61.6, while bankruptcy rates dropped significantly, with 10.9 percent fewer businesses filing.
"Over the last several quarters, we've seen small-business credit conditions continuously soar to new heights, making the struggles in the early part of 2014 seem like a distant memory," said Dan Meder, vice president for Experian's Business Information Services. "It will be interesting to see if small businesses can continue to maintain this payment behavior as we move through 2015. If they can, the credit spigot will continue to widen, opening up more opportunity for small businesses to grow."
"Small businesses, however, are not the only ones benefitting from improved payment performance. It's also a good sign for lenders and suppliers, as increased confidence in small businesses' ability to pay can lead to increased availability of credit and more sales," continued Meder. "With that said, lenders and suppliers will want to keep a close eye on how the data continues to trend. The insight that they can extract from observing payment trends will enable them to take the right action to reduce risk and make more confident decisions."
From a regional perspective, small-business credit quality continues to be split, with western states faring better than those east of the Mississippi. Small businesses in the Mountain West region enjoy substantially lower delinquency rates than the rest of the country, while those in the Northeast and Midwest continue to lag as the housing market recuperates.
For more information on the Experian/Moody's Analytics Small Business Credit Index, visit http://bit.ly/1vshZN4.
About the Experian/Moody's Analytics Small Business Credit Index
Experian joined forces with Moody's Analytics, a leading independent provider of economic forecasting, to create a business index and detailed report that provides insight into the health of U.S. businesses. The Experian/Moody's Analytics Small Business Credit Index is reported quarterly to show fluctuations in the market and discuss factors that are impacting the business economy.
About Experian's Business Information Services
Experian's Business Information Services is a leader in providing data and predictive insights to organizations, helping them mitigate risk and improve profitability. The company's business database provides comprehensive, third-party-verified information on virtually all U.S. companies, with the industry's most extensive data on the broad spectrum of small and midsize businesses.
By leveraging state-of-the-art technology and superior data compilation techniques, Experian provides market-leading tools that proactively support the entire credit life cycle, enabling our clients to find new customers, process new applications, manage customer relationships and collect on delinquent accounts.
About Experian
We are the leading global information services company, providing data and analytical tools to our clients around the world. We help businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. We also help people to check their credit report and credit score, and protect against identity theft. In 2014, we were named by Forbes magazine as one of the "World's Most Innovative Companies."
We employ approximately 16,000 people in 39 countries and our corporate headquarters are in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and Sao Paulo, Brazil.
Experian plc is listed on the London Stock Exchange (EXPN) and is a constituent of the FTSE 100 index. Total revenue for the year ended March 31, 2014, was US$4.8 billion.
To find out more about our company, please visit http://www.experianplc.com or watch our documentary, "Inside Experian."
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.
1Based on a scale of 1 to 100 (with 100 being least risky); predicts the likelihood of severe delinquency (more than 91 days past due) within the next 12 months
Contact:
Jordan Takeyama
Experian Public Relations
1 714 830 7561
[email protected]
Twitter: @JordanTakeyama
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SOURCE Experian
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