Commercial credit in Connecticut is slowly moving again amid improved credit conditions and borrowers are more confident in their outlook, a state business poll shows.
The fourth-quarter 2010 Connecticut Business & Industry Association/Farmington Bank Credit Survey found commercial borrowers their most optimistic about their ability to obtain credit since the second-quarter 2008, before the global economic meltdown.
The CBIA/Farmington Bank Current Credit Conditions Index is 27.7, up from 16.5 in the 2010 fourth quarter and at the highest in 10 quarters. Â
“We still have a long way to go to reach the levels attained back in 2007 before the onset of the Great Recession,” says CBIA Vice President and Economist Peter Gioia. “But these figures are promising and show our modest economic growth is beginning to loosen credit-welcome news for businesses.”
Fourteen percent of business executives polled rated current conditions “good” or “excellent,” the highest percentage in more than a year. Just 36 percent say current conditions are “poor” or “fair,” the lowest number since the third quarter of 2008.
Respondents expect conditions to continue improving over the next three months (February-April). Seventeen percent said that credit availability going forward will get better, up from 10 percent last quarter and 9 percent one year ago. In fact, these are the highest figures since the second quarter of 2008.
Slightly less than one third of respondents (31 percent) expect conditions to deteriorate. That’s up from 30 percent last quarter, but down from 37 percent in the second quarter of 2010. Less than a quarter (21 percent) of respondents said that credit availability is a problem for their companies — the lowest number in more than a year.
“Growing numbers of Connecticut businesses can now gain timely access to credit to help them increase inventories, hire new employees, modernize their facilities and finance day-to-day operations in a more efficient manner,” says banker John Patrick Jr., president and CEO of Farmington Bank.
Other key findings from the survey:
- More than half of all respondents (63 percent) said that without access to capital they have been unable to grow or expand their business; 26 percent said they’ve been unable to finance increased sales; and 22 percent said they have reduced their workforce.
- Twenty-nine percent of respondents used financing within the last three months.
- Businesses said they need capital to invest in new plants and equipment (38 percent), expand operations (16 percent), maintain current workforce size (13 percent), and hire new workers (13 percent).
- Eighty-four percent of businesses that received capital used traditional bank loans and lines of credit, 27 percent used credit cards, 22 percent used private loans, and 22 percent used vendor credit.
