Small business credit freeze shows signs of thaw

THAWING OUT: The small business credit freeze is showing more signs of ending, according to the Experian/Moody's Analytics Small Business Credit Index. The index rose 1.2 points to 117 during the fourth quarter from a revised 115.8 in the July-September period. It's the fourth straight quarterly increase. The latest reading is also the highest since tracking for the index began in 2011. Small businesses' credit balances grew, a sign banks are extending more credit after cutting back sharply following the 2008 financial crisis. Rising balances are in line with a Federal Reserve survey of bank officers that showed a majority of banks have eased their credit terms for small businesses over the last three years.

CLIMBING OUT: More small businesses appear to be reducing bad debts. A drop in delinquencies of 60 to 90 days past due implies that a greater number of severely behind businesses are paying down their debts faster.

THE OUTLOOK: A continued improvement in the housing market should boost the economy and help small businesses generate higher revenue, Experian and Moody's said. They forecast improving small business credit throughout this year and 2015. One possible negative: Insurance costs under the new health care law could pressure expenses.

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