By Cara Baruzzi, New Haven Register, Conn.
Oct. 27--Almost two years into the recession, nearly a third of Connecticut business executives say they still have trouble accessing credit and it is impeding their companies, according to a quarterly survey released Monday.
The third-quarter Connecticut Business and Industry Association/TD Bank Survey found that 31 percent of companies feel credit availability is a problem.
It is the largest percentage of executives to say that since the survey began five years ago, and is about triple the 10 percent who felt that way in the third quarter of 2005.
"Credit availability is very much a problem for small businesses across Connecticut," said Donald Klepper-Smith, chief economist at DataCore Partners in New Haven.
He and CBIA conduct the survey, which is sponsored by TD Bank and the Connecticut Development Authority.
"This is of crucial importance because credit is the lifeblood of any small business," Klepper-Smith said.
Company owners count on access to credit to fund everything from capital expenditures to payroll and other day-today expenses, he said. "This (economic) recovery is not going to be sustainable without credit availability," he said.
Executives seem pessimistic about the near-term credit outlook. Just 7 percent of those surveyed expect credit conditions to improve in the fourth quarter, while 46 percent expect conditions to worsen.
"The problem is particularly acute for firms seeking more than $100,000," CBIA Vice President and Economist Peter Gioia said in a statement.
"If businesses received the capital they need, we'd see more investment in new plants and equipment, and that would help expand operations and create jobs," he said.
The survey was conducted in September and garnered responses from 346 executives.
Forty percent of those who responded said they would invest in new equipment and plants if they could obtain credit, while one third said they would use credit to maintain their work force and 25 percent would use credit to expand into new operations, stores or branches.
The TD Bank Credit Availability Index, which is derived from the survey, showed a reading of 11.8 for the third quarter, a record low. It marked a drop from both the second quarter's reading of 14 and the reading of 19 recorded in 2008's third quarter.
A reading below 50 indicates credit conditions are deteriorating, while a reading above 50 indicates they are improving.
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