New Main Street Report Shows Small Business Credit Remains Stable in Q1

Published: May 23, 2016 by Gary Stockton

Experian Business Information Services and Moody’s Analytics have joined forces to develop the Experian/Moody’s Analytics Main Street Report.  The report leverages a combination of business credit data (including credit balances, delinquency rates and utilization rates) and macroeconomic data (including employment rates, income, retail sales and investments) to provide a more accurate assessment of the health of small businesses.

Small businesses are the engine of the U.S. economy – employing the majority of U.S. workers, so with this quarterly report Experian seeks to provide a unique view into the health of those small businesses, offering a benchmark on their overall financial health, and emerging trends across major industry sectors.

“Gaining deeper insight into the health of small businesses is important for credit-granting organizations, as well as the small-business owner. While credit grantors can leverage the information to make more profitable financial decisions, small-business owners can better understand the fluctuations in their industry and region. By working with Moody’s Analytics, we are able to combine our expertise and data resources to deliver a more holistic view of the trends impacting the business community in particular and the economy overall.”

Gavin Harding, Sr. Business Consultant
Experian, Global Consulting Practice

Q1 2016 highlights

The first quarter 2016 report shows that credit conditions for small businesses have remained relatively stable, as delinquency and bankruptcy rates hold steady at low levels. In fact, much of the slight decrease in delinquencies was driven by fewer small businesses falling within the 61 to 90 and 91+ days past due categories.

Additionally, the Q1 2016 report shows that small businesses have begun to expand their credit lines while keeping their utilization rates down. Through a combination of the increase in credit availability and small gains in balances, the average credit utilization for a small business dropped nearly 17 percent from the previous year.

“Small business credit conditions continue to improve, and near-term prospects are good.  Delinquencies and bankruptcies have declined in most industries and regions of the country for more than a year. The energy industry is the only exception. There are threats to the positive small business credit outlook, including prospects for rising interest rates and volatile financial markets, but those threats appear modest.”

Mark Zandi, Chief Economist
Moody’s Analytics

Other Q1 2016 findings:

  • Despite a strong economic performance relative to the rest of the country over the past several years, bankruptcy rates were elevated in the Southwest and the West
  • Delinquency rates for the retail industry ticked up slightly during the first quarter of 2016 as a result of weak retail sales
  • The top three states with the highest average business credit score* were Vermont (62.6), North Dakota (61.8) and South Dakota (61.7)

Download Main Street Report

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