CBIA: Credit conditions weakened

Connecticut”™s credit conditions weakened in the second quarter, according to a poll of business owners, with just 15 percent of respondents saying they expect an improvement in the near term, and 41 percent expecting a deterioration.

The Connecticut Business & Industry Association and Farmington Bank sponsor the survey. The Federal Reserve Bank of New York is scheduled to issue its own “Beige Book” assessment of economic and credit conditions Wednesday afternoon.

“With economic growth waning, demand for credit has slackened as well,” said Peter Gioia, a CBIA economist, in a prepared statement. “This lies in sharp contrast to what we saw earlier in the year when expectations for expansion were more favorable. It was hoped that the prospects for rising profits would boost business lending, thereby further reducing the risk of another downturn in the 2012-13 timeframe, but despite record-low interest rates, credit demand remains rather lackluster.”

About one in every four respondents saw credit availability as a problem for their business. Of that group, 27 percent said that lack of credit forced them to reduce their workforce, and 62 percent said that they would be unable to grow or expand as a result of inadequate credit. Another 16 percent indicated employee compensation or benefits would likely be reduced as a result.