Credit conditions worsen for small US companies.

(Bloomberg Opinion) -- More small U.S. businesses reported increasing difficulty obtaining loans in March after multiple bank failures led to further tightening of credit conditions.

A net 9% of homeowners who borrow frequently said it was harder to get financing than three months ago, the most since December 2012, according to a National Federation of Independent Business (NFIB) survey. ) published on Tuesday. The same percentage expect credit conditions to worsen further in the next three months and equal the highest level in a decade.

“Small business owners are skeptical of future economic conditions,” Bill Dunkelberg, NFIB chief economist, said in a statement. "There are great uncertainties ahead, the most immediate being the concern that a banking crisis could be triggered."

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The collapse of four banks in March, most notably Silicon Valley Bank and Signature Bank, prompted many lenders to tighten standards for commercial lending. That has made it even more difficult for smaller companies to borrow, compounding an already difficult financial environment after a year of interest rate hikes by the Federal Reserve.

Bad credit news, coupled with deteriorating sales prospects and expansion plans, sent the NFIB Small Business Optimism Index down 0.8 points to a three-month low of 90.1. well below pre-pandemic levels.

Twenty-six percent of business owners who borrow money said they paid a higher interest rate in March compared to the previous three months, the highest percentage since 2006.

Although credit is getting a bit harder to come by, it's still less of a problem for businesses than inflation and the quality of the workforce.

The proportion of owners who believe that the next three months will be a good time to expand the business fell to the lowest level since 2009, the report showed. Companies also scaled back capital spending plans.

One in five owners expect to invest in equipment or structures in the next three to six months, the smallest proportion in two years. Companies also reduced hiring plans and compensation.

The survey also showed that a net 15% said they expected weaker sales in the next three months, the highest proportion since August.

Original Note: US Small Businesses Face Worst Credit in a Decade After SVB

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