Experian / Moody’s Analytics claims Small Business Credit Rebound

So I see Experian/Moody's Analytics Small Business Credit Index improved to 117 for Q4 2013, a 1.2 point improvement from the revised 115.8 from the previous period.  They claim small business credit is improving for the following reasons:

Expanding credit balances appeared to have the most influence on the latest index rise. Analysts also cited the federal government's long-awaited completion of important matters, like government funding throughout FY 2014, with reduced brinksmanship. Granted, there is still concern regarding the Affordable Care Act and high unemployment, either of which could cause a setback for small business credit improvement.

Mmmmmm.  I personally like to look at the balances of small business loans held by FDIC-insured banks and thrifts.   According to the FDIC, total holdings of small business commercial and industrial loans (no agricultural or farm secured loans) peaked in 2008 at $336 billion. Since then, total holdings of small business loans have declined through the third quarter of 2013 to just under $284 billion, with all three categories of loan size (loans under $100,000, loans between $100,000 and $250,000, and loans between $250,000 and $1 million) experiencing the declines.

Loan Balances ($ Million)



C&I Loans < $100K



C&I Loans $100K-$250K



C&I Loans $250K-$1MM



C&I Loans < $1MM




This is the classic Chicken and Egg problem.  Are banks not lending because of no demand, or have credit policies changed to make it more difficult to get financing?   Regardless, the numbers note a decline in outstandings for small business, and just another reason for all the new finance initiatives.

Jason Busch, in his report on eInvoicing in 2014: The Battle of the Barbarians, Vikings and Aliens indicated the three drivers for adoption of Supplier Networks or eInvoicing platforms, and clearly financing is becoming more critical.  I suspect we will continue to see some interesting developments in many areas – Auctions, Supplier Networks, Pcards, etc. all with the aim of enabling credit for small business.

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