On May 10th we hosted an episode of Business Chat | Live. This episode features an interview with Experian Director of Analytics and Consulting, Peter Bolin. Peter shared highlights from his “State of Small Business Credit” presentation, which he co-presented at our Vision Conference in Orlando with Cristian DeRitis of Moody’s Analytics.
Gary: Welcome to today’s Business Chat Live. I am Gary Stockton with Experian Business Information Services. I’m going to be joined today by Pete Bolin, who’s Director of Consulting and Analytics at Experian. Pete just wrapped up his fifth annual State of Small Business Credit at the Vision Conference in Orlando.
Peter: Good afternoon Gary, thanks for having me.
Gary: Thanks for taking time out of your schedule. I know you guys are busy out there. You just finished the State of Small Business Credit and you presented there with Moody’s Analytics. Can you give us some high-level highlights and recap your talk?
Peter: Sure, absolutely. I’d love to. One of the things that was presented today in terms of the economic analysis is that we’re in very near full employment and they are projecting that the employment numbers are going to start … the market for employment’s going to get really, really tight. One of the other things in addition to that was the real estate market is coming back. He (Cristian DeRitis of Moody’s) had some statistics around home prices, particularly on the West Coast rising, so that’s good news for real estate market and all the businesses that serve realtors and all the small businesses that serve that space. That’s great news for them. I know down here in Florida it’s booming. They’re experiencing a big boom in real estate as well. This overall opinion on the economy the next 18 months was very bullish.
Gary: How about small business and paying their bills? Are they paying down debt, are they taking on new debt, are they taking out loans?
Peter: The state of the small business market is pretty stable. Very stable. Delinquencies are down, there is some increase in demand. Some of the utilization ratios are rising, so that’s starting to heat up as well. We’re also seeing that some of the online market is heating up. Traditional banks are also starting to get back into that small business lending space. Funds are becoming available, the overall economy looks like it’s definitely growing, and that’s all good signs for a small business market. Gary as you know, small businesses overwhelmingly are the drivers of employment in the United States so all of that bodes well in particular like I said earlier, we already know that Moody’s is already predicting a very tight labor market. All of those things are very, very positive for the economy.
Gary: Small businesses, they are adding jobs. Are they still confident? Because I heard that their confidence was taking a bit of a dip here in the first quarter.
Peter: Actually that’s not what we’re seeing in the economic data, that small business confidence has slightly ticked up. There was a report in … CNBC reported just yesterday on their broadcast that they were saying that business optimism was picking up, business owners are really looking forward to the cost savings from Obamacare, so I think that helped as well because we know the Obamacare cost does tend to hit small businesses. They’re very optimistic about that, so there is economic data that does suggest that the confidence of small business owners is picking up.
Gary: What else did you cover in the talk? What other highlights?
Peter: One of the other things that was really interesting is that we tend to say that small business, micro business, are the ones that are driving the employment, and what the data tends to suggest is that’s not necessarily the case. It’s more in that mid-range business. 50 employees to 100, they are the real, that medium enterprise business, they’re the ones that are actually driving that. That was a little surprising to me because I thought entrepreneurs coming in, they’re going to employ one, two, three and they are doing that. What the data this time around suggests is that the employment growth is really coming in that 50 to 100 employee space. That surprised me because that was something that I did not expect.
Gary: The data that we speak of, this is Experian data right, that we provide to Moody’s Analytics, they’re the economists that help us with this research. We do this every quarter with them and they produce the Main Street Report which I’m showing up on screen here in case the audience would like to get more information. I’ll put a link there. This is commercial data, commercial small business data on credit like payment trends, and also credit scores as well.
Peter: That’s correct. One of the things that we shared today and one of the things you’re going to see in the Main Street Report, is that there are some industries that are starting to recover. For example, one of the things that the data tends to suggest is that the mining industry is coming back. Delinquencies are down, we know from looking at our newly launched in-the-market model, the business credit seeker model, that that industry is looking for credit. They’re looking to expand, and given the current climate of Washington and the new administration, there’s definitely a strong trend in the mining industry. Their scores are very, very high, the net worth of the owners is relatively high. Delinquencies are down. The report will show that their IPV2 scores are very high. That all bodes well for industry that’s going to recover and any one lender out there is looking to target a potential industry, you might want to look at the mining industry. It’s starting to come back.
Gary: Agriculture as well. I’ve read the headlines on agriculture, they’ve had obviously some subsidies there that are helping. That’s the one industry that’s a real standout right now.
Peter: Mining, agriculture is coming back. One of the things the data suggests that Chris was talking about today was he’s also bullish on construction. That housing market’s picking up, construction traditionally got beat up in the last couple of years. It’s starting to come back. Housing’s starting to pick up. More construction is starting to pick up. He’s really bullish on that one as well.
Gary: It sounds like you had a great talk there. I think we’ll probably leave it there for now.
If folks want more information they can download the latest copy of the Main Street Report and also we’ll be covering additional data from the report in a webinar next month, so they can find out about that too. Thanks very much Peter for coming on and spending a few minutes with us.
Peter : Thank you for having me Gary. Look forward to having everyone read that report.
If you would like to be informed of new episodes of Business Chat | Live be sure to subscribe to our YouTube channel, and follow us on Twitter.
