Despite the threat of heavier taxes and sequestration, small business credit conditions improvedsignificantly during the first quarter, according to Experian.

In the Experian/Moody's Analytics report released Tuesday, the SmallBusiness Credit Index climbed 5.7 points in the first quarter to109, up from 104.3 in the previous quarter.

Details from the report showed that much of the first-quarterimprovement was fueled by lower delinquency rates and strongerconsumer spending.

Findings from the report showed that small companies faredconsiderably better in cities west of the Mississippi. This wasdriven in part by a resurgent housing market, while eastern citieshave been more directly affected by cuts in government spending andthe poor performance of Europe's economies.

Regionally, delinquency rates for small businesses in Houston, Phoenix andSan Diego were significantly lower than the U.S. rate in the firstquarter, whereas several major eastern cities were more than doublethe national average.

At the state level, delinquency rates in Arizona, Utah,Colorado, Wyoming and Idaho were significantly lower than the U.S.average, Experian reported.

“Small businesses have reduced their levels of paymentdelinquency, and that is a good sign,” said Dan Meder, vicepresident of Experian's Business Information Services. “Near-termpressure on consumer spending may adversely affect cash flow, sosmall businesses must continue to remain diligent in theirpayment behavior.”

Meder said by successfully meeting their payment obligations,small businesses avoid negative repercussions on creditavailability that could limit growth.

The Experian/Moody's Analytics Small Business Credit Index isreleased quarterly to show fluctuations in the market and discussfactors that are impacting the business economy.