Connecticut’s credit conditions continued to strengthen through the first three months of the year, according to the First Quarter 2013 CBIA/Farmington Bank Credit Availability Survey.

Demand for credit among the state’s businesses remained tempered, with 29% of those surveyed indicating they sought financing, a three percentage point increase over the previous quarter.

“The bottom line is that modest economic growth is now translating into cautious, but rising credit demand, despite the tenuous nature of the state’s economic recovery,” Connecticut Business & Industry Association economist Peter Gioia said today.

Connecticut businesses were more successful securing credit in the first quarter of the year, with lenders also showing more aggression in their efforts to provide financing.

The Farmington Bank Credit Availability Index (FBCAI) was at 35.8 points in the first quarter, compared with 30 in the previous period, hitting its highest level since the second quarter of 2008.

The FBCAI’s future expectations component, which measures credit availability three-to-six months from now, improved to 36.5 points, or almost five index points higher than the previous quarter.

“After two years of volatility, we’re now starting to see more credit find its way to businesses, which is a welcome sign,” said John Patrick, president and CEO of Farmington Bank.

Some 17% of respondents rated current credit conditions as either good or excellent in the most recent survey, while 50% said they were average.

“The good news is that area businesses seem to be securing the credit they need in order to meet payrolls and bolster inventories while positioning themselves for long-run growth,” said Don Klepper-Smith, chief economist and director of research at DataCorePartners.

“The bad news is that this is not ‘your father’s economic recovery’ and that profound structural changes have altered demand for labor. Clearly, Connecticut businesses are navigating a new economic normal.”

Of those who sought financing, 57% were seeking less than $100,000, while 27% wanted between $100,000 and $500,000.

Only 7% of respondents sought financing in excess of $1 million, a decline of two percentage points over the previous quarter.

Over a third (34%) said they would needed financing for working capital, while 14% planned machinery or equipment purchases, and 7% wanted to expand existing plant or office space.

The First Quarter 2013 CBIA/Farmington Bank Credit Availability Survey was emailed to approximately 1,900 Connecticut businesses in April of 2013. A total of 221 responded, for an 11.6% response rate and a margin of error of +/- 6.7%.