Atlanta, GA, March 9, 2010: To understand how market conditions today impact small businesses, Equifax examined key credit trends within the portfolios of top national and regional financial institutions, which together extend about 75% of all commercial credit. What the study found was something seemingly contradictory.

According to the Equifax study, fourth quarter 2009 data indicated that there were both improvements and setbacks notable in the trends for commercial bankruptcy, business failure and delinquency. While Equifax analysis showed an average 15% decline in commercial bankruptcies for the second half of 2009, there was a 14% increase in the number of bankruptcies reported during the fourth quarter of 2009 compared to the same period in 2008.

"Despite rising business failures and account delinquencies, the commercial landscape has revealed some surprises such as a double digit decline in small business bankruptcies during the second half of 2009," said Dr. Reza Barazesh, senior vice president, Commercial Information Solutions, Equifax."While these trends send mixed economic signals, it is clear that small businesses remain in a fragile state trying to navigate strong market pressures. How long this trend will continue is the question."

According to the Equifax study, there was a smaller bankruptcy rate change for multiple geographical regions from Q3 2009 to Q4 2009 than in previous quarters. However, bankruptcy rate changes across multiple regions remained high from Q4 2006 to Q4 2009. In all, 5 out of 9 regions saw a rate change of more than 50 basis points during this time period.

The most difficult regions for bankruptcy were the Pacific and Mountain regions.  These areas experienced a rate change of 72 and 61 basis points respectively from Q4 2006 to Q4 2009.

Small business bankruptcies continue to climb in the transportation sector,surpassing all other industries. According to the study, the bankruptcy rate for the transportation industry reached 2.64% in Q4 2009 - a marked increase in the rate change from Q4 2006. Strongly impacted by these trends as well was the construction industry, which experienced the largest rate change from Q42006 to Q4 2009. Manufacturing, retail and mining also showed strong increases during the same time period.

Equifax research on business failure uncovered some interesting findings in light of continued delinquencies and bankruptcy trends. According to Equifax, the percent of businesses with the highest risk of failure increased from 0.31% in Q4 2006 to 0.85% in Q4 2009. For the analysis, Equifax leveraged its Business Failure Risk Score, which projects the likelihood of business failure in the next 12 months.

Chart One: Percent of Businesses with Highest Risk of Failure

(Note: Analysis conducted using Equifax's Business Failure Risk Score.)

According to Equifax data, average past due dollars for lines of credit reached $37,160 in Q4 2009, a 273.4% increase over Q4 2006.  Delinquencies for term loans saw the second highest rise, with a 139.8% increase in average dollar delinquency during the same period. Also not immune to this trend were credit cards, with the average account delinquency totaling $3,255 in Q4 2009 - a 43.3% jump from Q4 2006. 


Chart Two: Delinquency Dollars



For more information about Equifax Commercial Information Solutions, visit www.equifax.com/commercial.

Equifax is a registered trademark of Equifax Inc. Inform, Enrich, Empower is a trademark of Equifax Inc. The Equifax Business Failure Risk Score is a trademark of Equifax Inc. Copyright © 2009, Equifax Inc., Atlanta, Georgia. All rights reserved. Printed in the U.S.A. Media Data Primer - 2/2010

To view a PDF of this entire study, see www.equifax.com/PR/pdfs/CommercialFactSheetFN3810.pdf.