COSTA MESA, Calif.—A new report shows that small business delinquencies were down in the first quarter.
Both the 30- and 91+-days past-due categories declined in the first quarter, while the 60- and 90-day buckets were nearly unchanged, according to the Experian/Moody’s Analytics Q1 2017 Main Street Report.
“This continues the trend established over the last two years and was to be expected, given the continued growth in the economy,” Experian stated.
Experian explained that small business confidence has come down from recent highs, but consumer confidence has continued to rise.
“As talk of tax policy was pushed out of the first quarter, small businesses adjusted their confidence down. Consumers, on the other hand, were encouraged as income gains continued and the unemployment rate kept trending lower. The economy has moved closer to, or even into, full employment,” Experian said.
As confidence in the economy has elevated, utilization of credit among small businesses has increased. Credit balances were up 8.8% year-over-year, while available credit increased by 4.5%. Additionally, utilization rates have now risen for four consecutive quarters. Previous increases were modest, with the rate of utilization rising less than one-half of a percentage point, but in the first quarter utilization rose by 1.8 percentage points to 41.8%, the report shows.
“Although a single data point doesn’t make a trend, utilization rates certainly appear to have turned a corner and look set to rise going forward, provided business confidence holds up,” Experian said.
Severe delinquencies among small businesses are highest in the Southwest and Midwest and lowest in the Northern Plains and Mid-Atlantic regions.
In the first quarter, South Dakota and Nevada once again had the lowest and highest rates of delinquency, respectively.
Although North Dakota had the second-lowest severe delinquency rate in the country in 2016 Q1, it moved to the fifth-lowest in the first quarter of 2017. This was driven by declines in the agriculture, construction and transportation industries, Experian explained.
“Previously, North Dakota’s severe delinquency rate among businesses in these industries was 0.56%, 2.29% and 0.48%, respectively. In the first quarter, this shifted to 0.87%, 5.5% and 0.97%. These shifts were partially offset by the mining industry’s decline in severe delinquency from 1.9% in 2016 Q1 to 1.4% in 2017 Q1 and a decline in the wholesale industry from 2.7% to 1.4%. The shifts in those two industries were enough to keep North Dakota among the states with the lowest rates of severe delinquency,” Experian said.