Despite the threat of heavier taxes and sequestration, small business credit conditions improved significantly during the first quarter, according to Experian.
In the Experian/Moody’s Analytics report released Tuesday, the Small Business Credit Index climbed 5.7 points in the first quarter to 109, up from 104.3 in the previous quarter.
Details from the report showed that much of the first-quarter improvement was fueled by lower delinquency rates and stronger consumer spending.
Findings from the report showed that small companies fared considerably better in cities west of the Mississippi. This was driven in part by a resurgent housing market, while eastern cities have been more directly affected by cuts in government spending and the poor performance of Europe’s economies.
Regionally, delinquency rates for small businesses in Houston, Phoenix and San Diego were significantly lower than the U.S. rate in the first quarter, whereas several major eastern cities were more than double the 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 payment delinquency, and that is a good sign,” said Dan Meder, vice president of Experian’s Business Information Services. “Near-term pressure on consumer spending may adversely affect cash flow, so small businesses must continue to remain diligent in their payment behavior.”
Meder said by successfully meeting their payment obligations, small businesses avoid negative repercussions on credit availability that could limit growth.
The Experian/Moody’s Analytics Small Business Credit Index is released quarterly to show fluctuations in the market and discuss factors that are impacting the business economy.