Q4 small business credit outlook turns neutral from positive

February 12, 2019 by Gary Stockton

Experian has released the Experian/Moody’s Analytics Main Street Report for Q4 2018. The report brings deep insight into the overall financial well-being of the small-business landscape, as well as providing commentary around what certain trends mean for credit grantors and the small-business community.

Bucket 17Q4 18Q3 18Q4
Moderately Delinquent 31-90 1.68% 1.63% 1.68%
Severely Delinquent 91+ 4.00% 3.40% 3.49%
Bankruptcy BKC 0.16% 0.16% 0.16%

The fourth quarter capped a second year of solid performance and growth for small-business credit, but there are signs that the period of moderation experienced during the past two years is over. Since the government shutdown has the potential to throw small-business lending a curve ball in the first half of 2019, the outlook for small-business credit is neutral. Conditions were positive in the fourth quarter, but this may not last long. Delinquency rates remained mostly stable, with pockets of weakness spread out among regions and industries, notably construction in the Plains. In addition to the 35-day shutdown, rising interest rates, destabilizing trade policy and slowing home-price growth are potential trouble sources that are already starting to impact some regions.

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