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Experian/Moody's Analytics Small Business Credit Index Soars To New Highs

November 19, 2014 by Gary Stockton

Experian/Moody's Analytics Small Business Credit Index Q3 2014

The Experian/Moody’s Analytics Small Business Credit Index (SBCI) gained 2 points to reach 114.8 from a revised 112.8 in the second quarter (previously reported as 112.2). The index measures credit conditions for firms with fewer than 100 workers, and last quarter’s move puts it at an all-time high. This is the second consecutive quarterly gain for the index after harsh winter weather pushed it lower in the first three months of this year and provides compelling evidence that the small-business landscape continues to improve. Credit balances and the number of trades each expanded in the third quarter, contributing to the rise in the SBCI.

Small businesses saw a 4.5 percent increase in average commercial risk score going from 58.0 to 60.6. This was accompanied by a decline in the delinquency rate to a cyclical low of 8.8 percent.

The report also shows that small businesses saw significant improvement in several other key business credit health categories. Most notably, they improved 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.

Bankruptcy rates have remained fairly low for the past three quarters, and in Q3 there were 11.9 percent fewer businesses filing for bankruptcy.

Joel Pruis, Sr. Consultant, Experian Joel Pruis, Experian

“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.”

 

 

Gain Insights on Small Business Credit From The Most Recent Quarterly Review

Highlights from the third-quarter report, including detailed business credit insights and macroeconomic trends, were recently presented in our Quarterly Business Credit Review Webinar.




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