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Credit Conditions on Main Street Improved in Q2

August 24, 2016 by Gary Stockton

Latest Main Street Report findings offer cautious optimism as small business bankruptcy rates and delinquencies decline

Experian has released the Q2 2016 Experian/Moody’s Analytics Main Street report. The report offers a unique quarterly snapshot into the health of small business credit in the United States. The report states current credit conditions for small businesses are improving across most of the country. Overall small-business delinquencies decreased slightly from last quarter, with dropping levels in every stage of delinquency. The total bankruptcy rate fell as well, although at a slower pace than the previous year.

“Small business owners have done a great job of managing their financial commitments and paying their bills on time over the past few quarters. This has led to an increased level of available capital which could enable them to expand or invest in their business to grow their enterprise. It will be very interesting, however, to watch the current trends unfold throughout the rest of the year as administration and potential policy changes, as well as the impact of Brexit and other global events could affect U.S. business behavior.”

Gavin Harding
Sr. Business Consultant, Experian

“Small businesses are doing well, and their near-term prospects are good. Delinquencies and bankruptcies are steadily declining, reflecting solid sales, low interest rates, and generally light debt loads. The only blemish is for businesses in the still struggling energy and related industries.”

Mark Zandi
Chief Economist, Moody’s Analytics

While current conditions enable small businesses to have an abundance of credit available to them, the average utilization rate was down almost 22 percent from the same period in 2015. The report found that this decline is the result of a slight increase in credit limits and a steady increase in balances.

Other Q2 2016 highlights:

  • The mining industry experienced the sharpest increase in severe delinquencies and bankruptcies across all industries in the second quarter.
  • The transportation and utility industries also experienced a decline, with the average severe delinquency rate increasing by 30 basis points during the quarter.
  • Construction has seen the strongest improvement, with severe delinquencies dropping by nearly one third in the last year and a half.
  • Construction bankruptcy rates, however, remain high in West Virginia and New Mexico, with rates of 0.59 percent and 0.44 percent, respectively.
  • Bankruptcy rates along the Eastern Seaboard tend to be below the national average.

About the Experian/Moody’s Analytics Main Street Report

Developed by Experian and Moody’s Analytics, the Experian/Moody’s Analytics Main Street Report brings deep insight into the overall financial well-being of the small-business landscape, as well as provides commentary around what certain trends mean for credit grantors and the small-business community as a whole. Key factors comprised by the Main Street Report include a combination of business credit data (credit balances, delinquency rates, utilization rates, etc.) and macroeconomic information (employment rates, income, retail sales, investments, etc.)


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