Credit remains problem for small businesses

In a pair of new surveys, businesses indicate that credit conditions remain tight in Connecticut, but expect business conditions and loan availability to improve.

A commercial credit index published by the Connecticut Business & Industry Association and TD Bank showed its lowest score since 2004 in the fourth quarter, but on the bright side a companion index rose that showed future expectations for securing credit.

“While credit conditions are still bad ”“ about 27 percent of the businesses say that they have troubled credit availability and 46 percent describe conditions for credit as fair or poor ”“ it is better than we had last quarter, and that”™s important because we need to get back on an upward trend,” said Peter Gioia, vice president and economist at Hartford-based CBIA, in a video posted on CBIA”™s website. “Credit is a lifeblood, particularly for small and mid-sized businesses, and we have seen deterioration for several quarters since 2006 in this survey in regards to credit outlook, and we are beginning to see the beginnings of a turnaround.”

In a separate poll by the Connecticut Society of Certified Public Accountants, just more than half of CSCPA members surveyed expect their companies to recover from the recession this year, but the rest do not forecast a rebound until 2011.

Nearly three in four accountants surveyed said that when a recovery does take hold, their companies will be operating in a new environment rather than a return to business as usual.

CPAs say business credit is still difficult to obtain in Connecticut, with 66 percent indicating their companies and clients are having a tougher time obtaining financing; 29 percent responding no change, and only 5 percent seeing loan availability actually improving during the past year.

“As financial advisers to virtually every type of business there is in Connecticut ”“ as well as to individuals ”“ CPAs are well positioned to see business and economic trends firsthand and up-close,” said Art Renner, executive director or CSCPA, in a statement.

Just more than 40 percent say their organizations”™ billings or sales are down from a year ago, with 37 percent saying billings are level and 22 percent citing improvement.

Half of the respondents say their accounts receivable levels are worse than one year ago, with 38 percent citing no change and only 5 percent indicating collections have improved.