Small-business credit conditions improve for second consecutive quarter, as delinquency rates hit lowest level on record
Costa Mesa, Calif., Nov. 12, 2014 — Experian®, the leading global information services company, today announced that small-business credit conditions have improved and reached an all-time high. According to the most recent Experian/Moody’s Analytics Small Business Credit Index, the continued rise in the third quarter can be attributed to growth in outstanding credit balances and delinquency rates reaching the lowest level on record, falling to 8.8 percent from 9.3 percent the previous quarter.
Highlights from the third-quarter report, including detailed business credit insights and macroeconomic trends, will be presented in a Webinar on Tuesday, Nov. 18, at 10 a.m. Pacific time. To register for the Webinar, visit Q3 2014 Experian’s Quarterly Business Credit Review.
“Small businesses are on increasingly solid financial ground,” said Mark Zandi, chief economist for Moody’s Analytics. “Most are benefiting from stronger demand for their goods and services, low interest rates and reduced debt loads. Prospects for further improvement in credit conditions are good.”
“Heading into the holidays, small businesses have positioned themselves in a positive light by doing a better job of paying down outstanding debt,” said Joel Pruis, Experian’s senior business consultant. “With improved business credit performance, small businesses are able to gain access to a wider availability of credit, which is critical as inventory demands and employee hours increase during the shopping season.”
Findings from the report also showed that small businesses saw significant improvement in several other key business credit health categories. Most notably, they improved their payment behavior in the third quarter, reducing the number of days they paid their bill beyond contracted terms by more than a day, or nearly 19 percent, from a year ago. Additionally, over the same time period, small businesses saw a 4.5 percent increase in average commercial risk score,1 going from 58.0 to 60.6. Third-quarter findings also saw 11.9 percent fewer businesses filing for bankruptcy.
“The data showing improved business credit performance doesn’t just benefit small businesses, but it also helps lenders and suppliers,” continued Pruis. “Not only do they have the reassurance that they’ll see repayment on loans that they’ve extended, but they will be able to use this insight to take the appropriate action to better mitigate risk and have more confidence when making future lending decisions. If the positive performance continues during this stressful time of the year, both small businesses and lenders will be able to enter 2015 with some momentum.”
Experian Public Relations
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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.
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 March 31, 2014, was US$4.8 billion. Experian employs approximately 16,000 people in 39 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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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