Small-business credit conditions slightly improve as economy shows signs of stalling, according to the Latest Experian/Moody’s Analytics Small Business Credit Index
Costa Mesa, Calif., Aug. 07, 2012 — Experian®, the leading global information services company, today announced that the Experian/Moody’s Analytics Small Business Credit Index edged up 0.9 point in the second quarter of 2012, to 104.1 from 103.2. This is the index’s third consecutive quarterly improvement, after it fell over much of 2011. Findings from the report also show that credit quality will be slow to improve in coming months, and threats to consumer confidence and spending have become more prominent. Business confidence is in line with an economy growing below potential, and this could weigh on hiring through the rest of the year, postponing the emergence of a strong, consumer-led recovery.
“Small businesses continue to get their financial houses in order, but the progress is slow and they remain cautious in expanding their operations,” said Mark Zandi, chief economist at Moody’s Analytics. “Until small businesses step-up more aggressively, the economy will struggle to grow.”
Highlights from the Q2 report show that small-business credit quality improved slightly amid slower hiring and new worries about the European fiscal crisis. Small-business financial strength continues to vary considerably across the country. In areas where hiring has picked up and earnings are growing, consumer spending has provided a much welcome boost to small companies. Where spending is still weak, small-business credit quality remains poor.
Additionally, the trend in business payment behavior continues to be a concern. On average, U.S. small businesses paid their bills 7.4 days beyond contracted terms (DBT) during the second quarter, compared with fewer than seven days this time last year. Average DBT grew regardless of firm size, but large firms employing more than 1,000 people showed the greatest increase, along with firms with fewer than 19 workers.
“Paying bills on time is just as critical for a business as it is for a consumer,” said Allen Anderson, president of Experian’s Business Information Services. “Delinquent payments have a direct negative impact on risk scores, making it difficult to qualify for the best rates and terms. Having this access to additional credit when needed, can be a business’ life line in times of economic distress.”
To receive a copy of the full Experian/Moody’s Analytics Small Business Credit Index report, please visit www.experian.com/SmallBusinessCreditIndex.
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About the Experian/Moody’s Analytics Small Business Credit Index
Experian joined forces with Moody’s Analytics 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 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 $2.3 billion in 2011, employs approximately 6,100 people worldwide and maintains a presence in 28 countries. Further information is available at www.moodysanalytics.com.
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 99.9 percent of all U.S. companies. Experian provides market-leading tools that assist clients of all sizes in making real-time decisions, processing new applications, managing customer relationships and collecting on delinquent accounts. For more information about Experian’s advanced business-to-business products and services, visit www.experian.com/b2b
Experian is the leading global information services company, providing data and analytical tools to clients around the world. The Group helps businesses to manage credit risk, prevent fraud, target marketing offers and automate decision making. Experian also helps individuals to check their credit report and credit score, and protect against identity theft.
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 31 March 2012 was US$4.5 billion. Experian employs approximately 17,000 people in 44 countries and has its corporate headquarters in Dublin, Ireland, with operational headquarters in Nottingham, UK; California, US; and São Paulo, Brazil.
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