Private companies ‘in pretty good shape’
As the deadline for averting major government spending cuts came and went, several reports noted the so-called sequester could result in cuts to U.S. Small Business Administration loan guarantees for businesses. On the bright side heading into the sequester, data from Sageworks, a financial information company, shows that private companies appear to be better positioned to borrow than they were a year ago, which could bolster their prospects if they seek non-SBA loans.
The average private company’s likelihood of credit default has declined over the last year, according to Sageworks’ most recent Private Company Report, a monthly review of the state of privately held U.S. companies. Private companies have also continued to increase sales and improve their net margins in the period ending January 2013, the report said.
“While the sequester’s impact on businesses remains to be seen, the good news is that private companies are in pretty good shape now,” said Sageworks Analyst Libby Bierman. “Sales growth is strong, profit margins are exceeding pre-recession levels, and credit risk appears to be improving. From that somewhat strong position, these companies can start to plan once they know how the sequester will impact them. We’ll continue to monitor the performance of private companies throughout the year.”
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